Valkyrie Investments Seeks More Control of the Grayscale Bitcoin Trust

Valkyrie Investments is working to become the new sponsor and manager of the Grayscale Bitcoin Trust, arguably the largest digital currency fund in existence.

Valkyrie Investments Wants a Bigger Role in Grayscale’s Environment

Based in Nashville, Tennessee, Valkyrie is tasked with managing $180 million in assets. In late December, the firm announced what’s to be called the Valkyrie Opportunistic Fund, which will take advantage of discounts being offered through Grayscale Investments. Valkyrie will thus increase its bitcoin holdings in the fund so it can realize the full value of bitcoin. It will also pursue additional bitcoin and digital currency opportunities for the sake of its customers.

In a statement, Steven McClurg – the co-founder and CIO of Valkyrie Investments – mentioned:

We understand that Grayscale has played an important role in the development and growth of the bitcoin ecosystem with the launch of GBTC, and we respect the team and the work that they have done. However, [due to] recent events involving Grayscale and its family of affiliated companies, it is time for a change. Valkyrie is the best company to manage GBTC to ensure its investors are treated fairly.

While Valkyrie is all set to obtain more bitcoin through Grayscale, how much control the company will have over future maneuvers is questionable given Grayscale’s current business model. The company has made it clear that no shareholders have sway over management protocols, nor do they have voting rights in the company. In addition, all changes or maneuvers can only be acted upon unless there is a majority decision regarding the shares. This means 50 percent or more.

As it stands, Grayscale shares are trading for around 50 percent less than the price of the bitcoin units held within the company’s grasp. This makes sense in many ways given how low bitcoin has fallen in recent months, and companies that tie themselves so directly to BTC – such as MicroStrategy and Coinbase – have not had it easy, as when bitcoin falls, their stocks usually fall along with it.

To say 2022 was a bad year for bitcoin and its many altcoin cousins would be a terrible understatement. BTC fell by more than 70 percent from its all-time high of about $68,000 per unit, which it achieved in November of 2021. From there, the currency experienced a long series of losses that caused it to fall into the mid-$16K range just before the end of 2022.

A Rough Patch for Both Entities?

Grayscale worked hard last year to become an exchange-traded fund of sorts based on bitcoin, though this notion (unsurprisingly) was rejected by the Securities and Exchange Commission (SEC). Grayscale has since struck up a lawsuit against the agency to give itself a fighting chance.

Valkyrie has been around for roughly two years, first opening its doors for business in January of 2021.

Tags: bitcoin, Grayscale, Valkyrie