GBTC has a new a competitor in the OTC Bitcoin trust market

A firm called Osprey Funds is offering an over-the-counter, or OTC, Bitcoin (BTC) trust under the ticker symbol OBTC. The trust is similar to Grayscale’s Bitcoin Trust, known as GBTC.

“The Osprey Bitcoin Trust provides easy access to bitcoin,” the firm’s website says. “With a 0.49% management fee, it is the lowest cost solution.” Osprey is an entity that “builds digital asset solutions for intelligent investors,” claiming OBTC as its “flagship offering,” the website adds.

"OBTC began being quoted in the OTC market today, Friday 1/15," Osprey Funds' CEO, Greg King, told Cointelegraph, adding:

"As of 1/14, the product met the requirements to become quoted under the ticker OBTC in the OTC market. Over the next 30 days, the fund will pursue DTC eligibility and after February 14, all additional market makers are allowed to quote it. After that point it will be considered 'fully launched.'"

Competitor Grayscale has become one of the largest Bitcoin holders in the world, possessing over 500,000 BTC as of November 2020. The firm is behind GBTC, which serves as a way to buy Bitcoin in stock share form. Each share of GBTC represents a fraction of a Bitcoin — 0.00094 BTC per share at the time of publication, based on Grayscale’s website. Interested parties buy and sell shares over-the-counter, available on mainstream brokerage platforms.

GBTC, in part, offers the public easier access to Bitcoin through more traditional avenues, without requiring them to custody their own funds. Grayscale’s Bitcoin Trust comes with a yearly 2% management fee, however. Osprey’s recently unveiled BTC trust touts a fee of 0.49%. “Osprey is likely trying to capture some of that market share by undercutting GBTC’s fee, according to Bloomberg Intelligence,” Bloomberg wrote in a report on Friday. Osprey has called on Fidelity as the custodian for the endeavor. 

Osprey's Bitcoin fund, however, operates under a Reg. D SEC exemption, while GBTC holds Reg. A and D exemptions, allowing for non-accredited investors to access the fund, albeit with limits on total shares that can circulate among non-accredited investors.

“We are always happy to see digital currency access products enter the market, especially here in the U.S.,” Grayscale CEO Michael Sonnenshein told Bloomberg. 

“Accredited investors face a $25,000 minimum to buy directly into the trust,” Bloomberg wrote. “Shares have a lock-up period of one year before they can be sold in the secondary market.” In contrast, Grayscale’s Bitcoin Trust requires assets to be locked up for six months. Osprey could see its 12-month lock-up cut in half in the future, however, based on King’s comments to Bloomberg.

Wilshire Phoenix, an investment firm, filed for a similar product with the Securities and Exchange Commission in June 2020.