According to statistics from the YCharts data aggregator, seven digital currency funds issued by asset manager Grayscale Investments are currently discounted from 34% to 69% to their net asset value. Stakes analyzed include Grayscale Bitcoin Trust, Ethereum Trust, Ethereum Classic Trust, Litecoin Trust, ZCash Trust, Horizen Trust, Stellar Lumens Trust, and Livepeer Trust.
All funds track the performance of their namesake cryptocurrencies, with G beingrayscale Stellar Lumens Trust has the lowest NAV discount, 34%, and the Grayscale Ethereum Classic Trust has the highest NAV discount, 69%.
At the time of publication, the average discount on the net asset value shared by the group funds is 50%. This figure is close to the discount value of Grayscale Bitcoin Trust (GBTC), the largest fund with $10.6 billion in digital assets under management, but only $5.59 billion in net equity liquidation value. Meanwhile, the Grayscale Ethereum Trust, which owns $3.75 billion worth of Ether (ETH), is also trading at a 50% discount.
Grayscale’s investment vehicles have not been approved by the United States Securities and Exchange Commission (SEC) as exchange-traded funds (ETFs) and are therefore traded over-the-counter (OTC) markets. His funds, such as GBTC, previously traded at a premium during the cryptocurrency bull market due to high investor demand.
However, a series of setbacks appears to have shaken investor confidence in their investment vehicles. First, The SEC rejected the company’s application to list GBTC as an ETF on June 29, claiming that the proposal failed to demonstrate how it was “designed to prevent fraudulent and manipulative acts and practices.” Grayscale responded with a lawsuit against the SEC that is ongoing. The company’s legal officer estimated that the dispute could last up to two years.
Second, Grayscale’s parent company, Digital Currency Group, has been plagued by rumors of insolvency amid the crypto winter, especially after its subsidiary Genesis Global put withdrawals on hold on Nov. 16, citing a ” unprecedented market turmoil” related to the collapse of troubled cryptocurrency exchange FTX.
Finally, Grayscale stopped short of disclosing all on-chain information, citing security concerns, in response to user requests for a proof-of-reserves audit. Instead, the company shared a letter from Coinbase Custody certifying the value of its holdings. In total, Grayscale currently manages $14.7 billion in digital currencies in its OTC funds.
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