Grayscale Ethereum Mini Trust, Key Spinoff Concerns Addressed

After Grayscale announced the fee slash for its Ethereum Trust spinoff to an Ethereum Mini Trust ETF, some crypto enthusiasts are curious to know more about the product. Quite a number of people are concerned about how it would operate, considering that it is a new shift.

Mechanics For Grayscale Mini Trusts

James Seyffart, a Senior Bloomberg ETF Analyst, took out time to explain the mechanics of the new Grayscale product. He noted that it would essentially be the same for the Grayscale Bitcoin Trust and BTC Mini Trust ETF. That is, if you own 1,000 shares of ETHE, you should receive 1,000 shares of mini ETH. This is from a share point but from a value point of view, it is quite different.

A person who has $1,000 in ETHE or GBTC, will end up with $900 in the original fund and $100 in the new mini ETFs after the spinoffs.

Doing a thread on the situation for @Grayscale‘s spinoff for $ETHE & $ETH because I’ve gotten about a million questions on it. The mechanics will be essentially the same for $GBTC & $BTC spinoff. If you own 1,000 shares of $ETHE, you should receive 1,000 shares of mini $ETH. 1/ pic.twitter.com/Er66mj5L46

— James Seyffart (@JSeyff) July 19, 2024

Markedly, July 18 was initially announced as the record date for the first issuance and distribution of shares of the new Grayscale Ethereum Mini Trust. However, it has now been rescheduled for July 23 while the spinoff for GBTC to BTC Trust is scheduled to happen on July 31 as earlier announced.

Grayscale BTC And ETH Mini Trusts Share Distribution

As a criteria for share distribution, Seyffart stated that one had to be the owner for those shares on the record date. He went on to say the record date was the reason for the drop in ETHE trading price on Thursday when trading commenced. Seyffart believes that GBTC will follow similar trend when its spin off happens in about two weeks.

According to the ETF Analyst, ETHE has a current market value of $29. “Theoretically the $ETH shares would hit your brokerage accounts at a much lower handle (price per share) because you are getting an equivalent number of shares in the new fund but its 1/10th of the value of your original position. Somewhere around $2-$3 per share?”

He says the same applies to GBTC which has a current value of $59 per share. The BTC Trust should trade between $5-$6 per share based on the trading price as of today.

Meanwhile, the sponsor fee for both the Grayscale Bitcoin Mini Trust and the Ethereum Mini Trust has been fixed at 0.15%. This makes the duo the cheapest crypto ETF products in the market to date.

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