Grayscale is examining the potential tax consequences associated with spot Bitcoin (BTC) exchange traded funds (ETF) after inaccurate reports of adverse tax implications began circulating.
In a series of posts on
While we work to obtain appropriate regulatory approvals for uplisting $GBTC According to NYSE Arca, we are considering the possible tax implications for spot Bitcoin ETFs that need to be sold $BTC Stocks for cash to meet share redemptions.
That’s why we’re talking about it now. (1/7)– Grayscale (@Grayscale) December 15, 2023
Grayscale explained this is because the GBTC is structured as a grantor trust, meaning that the company creating the trust is the owner of the assets – in this case the underlying Bitcoin – for income and tax purposes.
“Cash redemptions from grantor trusts are not taxable events for non-redeeming shareholders such as retail investors,” the post says, explaining the difference from mutual funds:
“Unlike mutual funds and many other ETFs, essentially all spot commodity ETFs (e.g. gold) are structured as grantor trusts for tax purposes. It is our position that GBTC is properly treated as a grantor trust.”
Related: Brazil Signs Overseas Crypto Tax Bill
This follows recent reports that the US Securities and Exchange Commission (SEC) has held another meeting with Grayscale to further discuss its spot Bitcoin ETF application.
On December 8, Cointelegraph reported that Grayscale and Franklin Templeton were meeting with the SEC to review their applications, just a day after Fidelity representatives appeared before the SEC.
Meanwhile, just a few days earlier, on December 5, the SEC postponed the decision on Grayscale’s spot Ether (ETH) ETF application until January 24, 2024.
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Originally posted 2023-12-16 12:02:11.