The 4 stage product life cycle of crypto funds
- Investment Vehicles like GBTC and ETHE are struggling to become ETFs.
- In the absence of acceptance as an ETF, Grayscale offers a unique 4 Stage Product Life Cycle for Crypto Funds, that increases accessibility at every stage.
Despite Bitcoin’s popularity, crypto funds like Grayscale’s $20 billion GBTC are still waiting for recognition as an ETF. To date, the SEC has not approved a crypto ETF based on spot pricing.
Since this widely-accessible investment vehicle is currently unavailable, fund providers need to offer “the next best thing,” according to Craig Salm, Grayscale’s Chief Legal Officer. Speaking at Tearsheet’s inaugural Bankchain Conference last week, Salm outlined Grayscale’s “4 Stage Product Life Cycle”, a blueprint for how digital assets can be turned into robust investment vehicles despite regulatory unclarity:
1) First, Grayscale raises a private placement in a trust to invest in digital assets, which is only available to accredited investors, with a lock up period of at least one year. According to Salm, this is done through an exemption from SEC registration under Rule 506(c). It’s the easiest type of fund to get off the ground but also the most restrictive.
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