Originally published on: November 20, 2024
Grayscale Investments, a major player in the world of Bitcoin exchange-traded funds (ETFs), is taking steps to enhance the cost-effectiveness of its crypto ETFs through reverse share splits.
In a recent development on Nov. 19, Grayscale successfully completed reverse share splits for its two crypto ETFs, the Grayscale Bitcoin Mini Trust ETFBTC$97,098and Grayscale Ethereum Mini Trust ETFETH$3,728.07.
The purpose of these reverse share splits, according to Grayscale, is to streamline the trading of securities and make it more cost-effective for investors.
“We are dedicated to evolving our product suite to meet the evolving needs of the investment community. Based on feedback, we believe this decision will benefit our clients and the investment landscape,” Grayscale stated.
After the reverse share split took place at 10 pm UTC on Nov. 19, the price per share of the Grayscale Bitcoin Mini Trust ETF increased by five times. Simultaneously, ETF holders experienced a proportional decrease in the number of shares they held.
Furthermore, investors now have the ability to hold fractional shares which can be managed and sold by the shareholder’s depository trust company (DTC) or aggregated as needed.
Grayscale emphasized that shareholders will receive the net cash proceeds from the sale of these fractional shares. However, it’s important to note that fractional shares are not tradeable on NYSE Arca.
As a result of the reverse share split of the Grayscale Ethereum Mini Trust ETF, the price per share surged 10 times from the net asset value (NAV) of a share prior to the split. Shareholders will witness a similar proportional decrease in the number of shares they hold, excluding fractional shares.
The impact of the reverse share split will be reflected in trading on Nov. 20 following the split on Nov. 19. For the Grayscale Bitcoin Mini Trust ETF, every five pre-split shares will convert into one post-split share of BTC, priced five times higher than the NAV of a pre-split share.
Similarly, for the Grayscale Ethereum Mini Trust ETF, every 10 pre-split shares will convert into one post-split share of ETH, valued 10 times higher than the NAV of a pre-split share.
Grayscale reassured shareholders that they do not need to take any action as the share splits will occur automatically, and their holdings will remain unchanged.
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