Digital Currency Group Authorizes $250M Buyback for Its Grayscale Trusts

March 03, 2022
Digital Currency Group Authorizes $250M Buyback for Its Grayscale Trusts
Included is the Grayscale Bitcoin Trust, which continues to trade at a notable discount to its net asset value.

The Digital Currency Group (DCG) board has authorized a share repurchase program of up to $250 million across its nine publicly-traded cryptocurrency trusts.

The plan includes up to $30 million worth of shares in the Grayscale Litecoin Trust (LTCN), $10 million of the Grayscale Horizen Trust (HZEN), $10 million of the Grayscale Zcash Trust (ZCSH), and up to $200 million in any of its other six publicly-traded products, including the Grayscale Bitcoin Trust (GBTC).

DCG will use cash on hand to fund the repurchases, and will do so in the open market under management’s discretion.

The Grayscale Bitcoin Trust has been trading at a steep discount to net asset value for months, and in October DCG upped its buyback plan for that product to $1 billion from $750 million. As of Thursday, there was $301.3 million of remaining authorization in that program, and as of Wednesday, the trust was selling for a 24.9% discount to net asset value (NAV).

The Litecoin, Horizen, and Zcash trusts also trade at sizable discounts to NAV.

“Typically when a closed-end fund is trading at a double-digit discount to NAV, the manager will repurchase shares to try to reduce the discount for investors,” Accelerate Financial Technologies CEO Julian Klymochko told CoinDesk. “It looks like DCG is buying (as opposed to the funds), so they must see good value,” he added.

The ultimate solution to the discount will be the conversion of the trust to an exchange-traded fund (ET). DCG and Grayscale have made no secret of their interest in doing that.

DCG, Grayscale’s parent company, also owns CoinDesk as an independent subsidiary.