Grayscale Investments, one of the world’s largest Bitcoin exchange-traded fund (ETF) issuers, is making moves to improve the cost efficiency of its crypto ETFs through reverse share splits.
On Nov. 19, Grayscale completed reverse share splits of its two crypto ETFs, the Grayscale Bitcoin Mini Trust ETF (BTC) and Grayscale Ethereum Mini Trust ETF (ETH).
Grayscale said the reverse share splits for the ETFs are designed to make the trading of securities more “cost-effective.”
“We are constantly looking for ways to evolve our product suite to meet the wants and needs of the investment community. Based on feedback from our clients, we believe this is the right decision and beneficial to our clients and the investment community,” Grayscale said.
Grayscale Bitcoin Mini Trust ETF’s price increased by 5x
Following the reverse share split, which occurred at 10 pm UTC on Nov. 19, the Grayscale Bitcoin Mini Trust ETF saw its price per share increase by five times. At the same time, the ETF holders saw a proportionate decrease in the number of shares outstanding.
Additionally, as a result of the splits, investors could hold fractional shares, which can be tracked by the shareholder’s depository trust company (DTC) on its internal ledgers or aggregated and sold after determining the number of fractional shares created due to the split.
“Shareholders will receive the net cash proceeds of such sale in proportion to the fractional shares sold that would otherwise be held by such shareholders as a result of such reverse share split. Fractional shares cannot trade on NYSE Arca,” Grayscale noted.
10x price increase for Grayscale Ethereum Mini Trust ETF
As a result of the reverse share split of Grayscale Ethereum Mini Trust ETF, the trust’s price per share increased 10 times from the net asset value (NAV) of a share prior to the split.
The shareholders must observe a similar proportionate decrease in the number of shares, excluding fractional shares.
An illustration of 1:5 and 1:10 reverse share splits. Source: Grayscale Investments
Following the reverse share split on Nov. 19, shareholders will see its effect on the next day of trading on Nov. 20.
For the Grayscale Bitcoin Mini Trust ETF, every five pre-split shares of the ETF will result in the receipt of one post-split share of BTC, which will be 5x higher than the NAV per share of a pre-split share.
At the time of writing, Grayscale Bitcoin Mini Trust ETF is priced at $41 in pre-market, according to data from TradingView.
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For Grayscale Ethereum Mini Trust ETF, every 10 pre-split shares of ETH will result in the receipt of one post-split share of ETH, which will be 10 times higher than the NAV per share of a pre-split share. The fund is priced at $2.90 in pre-market, according to TradingView.
According to Grayscale, shareholders do not need to take any action due to the share splits, as they will happen automatically.
“Importantly, your holdings will remain unchanged,” Grayscale said.
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