DCG to buy back Grayscale crypto-trust shares worth $250 million

Digital Currency Group (DCG) has announced plans to repurchase Grayscale trust shares worth $250 million. The decision comes amid persistent discounts to the trading prices of the subsidiary’s products.

Digital Currency Group Announces $250 Million Share Repurchase Program for Grayscale® Litecoin Trust (OTCQX: $LTCN), Grayscale® Horizen Trust (OTCQX: $HZEN), Grayscale® Zcash Trust (OTCQX: $ZCSH), and other Grayscale Products https://t.co/zKoEWkfyk1

— Barry Silbert (@BarrySilbert) March 2, 2022

The programme will cover the fund shares based on Litecoin ($30 million), Horizen ($10 million), Zcash ($10 million). Up to $200 million could be directed toward repurchasing shares of six additional publicly traded Grayscale products:

• Bitcoin Trust (GBTC);
• Bitcoin Cash Trust (BCHG);
• Ethereum Trust (ETHE);
• Ethereum Classic Trust (ETCG);   
• Stellar Lumens Trust (GXLM);
• Digital Large Cap (GDLC).

The board of DCG’s decision increases the previously approved buyback limits for GBTC and ETCG, with outstanding balances of $301.3 million and $4.5 million respectively.

According to otcnode, at least six of the trusts included in the buyback programme trade at a negative premium. This means the funds’ shares trade below the market prices of the underlying assets. The largest discount is for ETCG (-59%), while GBTC stands at -17%.

In October 2021, Grayscale filed an application with the SEC to convert its Bitcoin Trust into a spot ETF.

Analysts were skeptical about its chances of approval, noting the persistent discount to the fund’s shares as one reason.

In February 2022, the regulator postponed a decision on Grayscale’s Bitcoin ETF prospectus.