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.