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Meet The 2 Newest Grayscale Products That Trade On OTC Markets

Traders and investors looking to buy and sell cryptocurrencies on the secondary market now have two new securities at their disposal.

· 09/03/2020 08:51

Traders and investors looking to buy and sell cryptocurrencies on the secondary market now have two new securities at their disposal.

What Happened

Two new Grayscale products began trading last month on the OTCQX Market: Grayscale Bitcoin Cash Trust (OTCQX:BCHG) and Grayscale Litecoin Trust (OTC:LTCN). The new securities bring the total of Grayscale products that trade publicly on a regulated market to six.

The securities are structured as open-ended trusts. Similar to other Grayscale products, each trust will hold the underlying cryptocurrency and track its performance through the corresponding TradeBlock index (minus fees and expenses).

“The Trusts will not generate any income and will regularly distribute Bitcoin Cash and Litecoin respectively to pay for its ongoing expenses,” according to the company. “Therefore, the amount of Bitcoin Cash and Litecoin represented by each respective share gradually decreases over time.”

Since March of 2018 Grayscale has offered a private placement to accredited investors for each of the trusts. Those investors who participated will be eligible to sell their shares after a one year holding period.

As of August 31, 2020, there were 12,806,000 Shares Outstanding of BCHG, with each share representing 0.00939315 Bitcoin Cash/share, and 4,028,000 Shares outstanding of LTCN, with each share representing 0.09393145 Litecoin/share.

Why It's Important

According to the company, BCHG and LTCN are the first publicly quoted securities in the U.S. that track Bitcoin Cash and Litecoin respectively. The introduction of LTCN and BCHG on a regulated trading market makes the cryptocurrencies available to investors who might otherwise have been locked out of, or have restrictions operating within, the unregulated cryptocurrency market.

They also give investors the opportunity to buy and sell Litecoin and Bitcoin Cash without having to worry about going through an unregulated exchange and storing the asset directly.

Known largely for its Grayscale Bitcoin Trust (OTCQX:GBTC), Grayscale Investments is the world's largest digital currency asset manager with more than $6.1 billion in assets under management as of August 31, 2020.

The company’s other products that trade on OTCQX include Grayscale Ethereum Trust (OTCQX:ETHE), Grayscale Ethereum Classic Trust (OTCQX:ETCG), and Grayscale Digital Large Cap Fund (OTCQX:GDLC).

Through the first 10 trading days, BCHG averaged a daily volume of roughly 92,000 shares, while LTCN averaged 14,750 shares.

Benzinga's Take

For the first time, retail investors can now buy and sell Bitcoin Cash and Litecoin on a public market. The introduction of BCHG and LTCN to public markets is another development in the continuing progression of crypto into the mainstream.

The two new crypto-related securities will also come at a welcome time for investors searching for alternatives to equities in light of the stock market’s historic rally.