DCG plans to buy $50 million in Grayscale's ETC Trust shares as discount persists

Quick Take

  • Digital Currency Group plans to buy up to $50 million in shares of Grayscale’s Ethereum Classic Trust.
  • The plan comes as the trust product continues to trade at a discount for over two months.
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Digital Currency Group (DCG), the parent company of crypto asset manager Grayscale, announced Monday a plan to buy up to $50 million in shares of Grayscale's Ethereum Classic (ETC) Trust.

The plan comes as the Grayscale ETC Trust continues to trade at a discount for over two months, meaning the market price of the trust's shares has been trading lower than its net asset value or NAV.

The current discount of Grayscale's ETC Trust is over -33%, according to tracker Bybt. The market price of the trust's shares is about $28 at the time of writing, while its NAV is around $40. The Grayscale ETC Trust discount peaked at -55% last month.

Buying back of shares is a common strategy for companies looking to increase the market price of their shares by simultaneously creating demand while decreasing the number of shares outstanding.

Recently, DCG also announced plans to buy up to $750 million in shares of Grayscale's flagship product, Grayscale Bitcoin Trust (GBTC). But that effort doesn't seem to have helped GBTC much. The product continues to trade at a discount for over four months. Its current discount is nearly -15%, according to The Block's Data Dashboard.

There are several factors behind the GBTC discount, as The Block reported recently. These include new competition and selling pressure from existing customers.

Grayscale has said that it remains "100% committed" to converting GBTC to a bitcoin exchange-traded fund (ETF), but the firm's CEO Michael Sonnenshein said the regulatory environment in the U.S. still isn't ready. The U.S. Securities and Exchange Commission has yet to approve a bitcoin ETF in the country.

Besides the ETC Trust and GBTC, Grayscale's Ethereum Trust has also been trading at a discount for the past few months. The Ethereum Trust's current discount is over -8%, according to Bybt.


© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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