Grayscale is assessing possible tax consequences associated with its spot Bitcoin (BTC) exchange-traded fund (ETF) after inaccurate reports regarding adverse tax implications were circulated.
In a series of posts to I made it clear.
We are working to obtain appropriate regulatory approvals for Uplist. $GBTC At NYSE Arca, we are considering the potential tax implications for spot Bitcoin ETFs that need to be sold. $BTC Cash reserves to fulfill stock repurchases.
Here’s why we’re talking about this now: (1/7)— Grayscale (@Grayscale) December 15, 2023
Grayscale explained that because GBTC is structured as a grantor trust, this means that the entity establishing the trust is the owner of the asset (in this case, the underlying Bitcoin) for income and tax purposes.
“Cash redemptions from grantor trusts are not taxable to non-redeeming shareholders, such as individual investors,” the post said, explaining the differences from mutual funds.
“Unlike mutual funds and many other ETFs, virtually all physical commodity ETFs (e.g. gold) are structured as grantor trusts for tax purposes. We take the position that GBTC is properly treated as a grantor trust.”
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This follows a recent report that the U.S. Securities and Exchange Commission (SEC) held another meeting with Grayscale to further discuss the application of a spot Bitcoin ETF.
On December 8, Cointelegraph reported that Grayscale and Franklin Templeton had reviewed the application with the SEC, one day after a Fidelity representative appeared before the SEC.
Meanwhile, just a few days ago, on December 5, the SEC postponed its decision on Grayscale’s spot Ethereum (ETH) ETF application until January 24, 2024.
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