Grayscale has begun to assess what the consequences can be tax-wise when it comes to spot Bitcoin ETFs (exchange-traded funds). The decision was taken after inaccurate reports began to surface about the implications being unfavorable. The firm took to X (earlier called Twitter) to make several posts clarifying the situation. They stated that GBTC’s (Grayscale Bitcoin Trust) retail investors can expect no tax implications when Bitcoin is sold by the fund to raise cash to meet share redemptions.
Grayscale Reassures Investors
According to the firm’s explanation, the reason there won’t be any tax implications is because of the structure of the GBTC. It is a trust of grantors. This means that the assets’ proprietor for tax and income purposes is the trust’s establishing entity. In GBTC’s case, that is the Bitcoin underlying the trust. The post clarified that grantor trusts’ cash redemptions are not events that can be taxed when it comes to retail investors and other shareholders who are non-redeeming.
Recently, reports surfaced that the SEC (United States Securities and Exchange Commission) had met with Grayscale once more to discuss more about the application of the spot Bitcoin ETF. On December 8th, media outlets reported about a meeting involving Grayscale, Franklin Templeton, and the SEC as their applications were reviewed. This was about 24 hours after Fidelity’s representatives gave an appearance at the SEC.
During the same period, on December 5th, there was a pushback by the SEC on Grayscale’s decision regarding spot Ether ETF applications. It was pushed back till January 24th, 2024.
