Grayscale partners with BNY Mellon around Bitcoin ETF Plans

Key Takeaways

• Grayscale Investments selects BNY Mellon as its asset servicing provider.
• Grayscale prepares to convert its Bitcoin trust into an ETF.
• BNY Mellon increases its crypto involvement
• Grayscale faces competition from at least nine companies to offer the first Bitcoin ETF in the U.S.

YEREVAN (CoinChapter.com) — Grayscale Investments, the world’s largest digital asset manager, announced that it had joined hands with the Bank of New York Mellon, the oldest continuously operating bank in the US.

We have selected @BNYMellon as an asset servicing provider for Grayscale #Bitcoin Trust, an important milestone as part of our commitment to converting $GBTC into an #ETF. Learn more here. #BitcoinETF https://t.co/lItCbk7NFX pic.twitter.com/Gq6sCK3RHH

— Grayscale (@Grayscale) July 13, 2021

Based on the agreement reached by the two financial giants, BNY Mellon will take care of fund accounting and administrative services for the GBTC. The deal will come into effect from October 1, 2021. 

If the Securities and Exchange Commission (SEC) approves Grayscale’s application, BNY Mellon will also provide transfer agency and ETF services to the organization. 

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A chance at scalability for Grayscale

Should things go according to plan, it will mean that Grayscale has moved one step closer to converting its Bitcoin Trust into Bitcoin ETF. To date, no company has floated a Bitcoin ETF in the US.

Through the agreement, Grayscale also expects to achieve improved scalability, resiliency, and automation. In addition, thanks to BNY Mellon’s platform, which boasts of a proprietary ETF Center offering a technology specifically designed to support digital asset ETFs, Grayscale can venture into unchartered territory.

Michael Sonnenshein, CEO of Grayscale Investments, had the following to say about the partnership with BNY Mellon:

“We are pleased that BNY Mellon will join a group of Grayscale’s best-in-class service providers, helping us deliver a seamless, industry-leading investment experience.”

In February this year, Michael Sonnenshein, CEO of Grayscale, revealed its plans to upgrade its GBTC product into an ETF. Sonnenshein was a guest on an episode of The Scoop, hosted by Frank Chaparro when he made the big reveal. 

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Mellon dives deep into crypto 

In recent months, BNY Mellon has become actively involved in the cryptocurrency space. The bank started offering Bitcoin custody in February. As part of its crypto adoption program, it also invested in Fireblocks.

The oldest bank in America, Bank of New York Mellon, just invested in the #Bitcoin custodian company, Fireblocks!

BNY Mellon is one of the world’s largest custody banks, and they plan to hold, transfer, and buy #bitcoin for their asset management clients!

— Documenting Bitcoin 📄 (@DocumentingBTC) March 18, 2021

The oldest bank in America also launched a crypto unit in Ireland last month. It established a digital hub in Dublin to offer crypto custody services. The development came despite the Irish Central Bank’s warning to steer away from crypto. Derville Rowland, the CBI’s Director-General for Financial Conduct, had warned that “crypto-assets are quite a speculative, unregulated investment.”

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Grayscale faces tough competition

Earlier this week, Grayscale obtained approval to become an SEC-reporting company for its Digital Large Cap Fund, according to reports.

The Fund, composed of Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ethereum Classic, is the company’s first SEC approval beyond Bitcoin and Ethereum. Before this development, the approval had only been given to Bitcoin and Ethereum trust funds.

I am skeptical that etf will ever happen because the US does not want it to happen. They can’t control bitcoin, but they can control the stock market. Besides we already have an ETF -> $MSTR

— newschool 🇸🇻🌋⚡️ (@newskhool) July 13, 2021

However, the company also faces significant competition when offering the first Bitcoin ETF in the US. At least nine other companies have submitted applications with the SEC for approval, including Galaxy Digital Holdings Ltd. and Fidelity Investments. Whether the SEC will hasten the approval process due to the increased number of applications or will refuse as predicted by skeptics remains to be seen.

With such tough competition, Grayscale does not have it easy at all.