Grayscale Launches Proof-of-Stake Investment Fund for Accredited Millionaires

Grayscale, a prominent digital asset management firm, has unveiled plans to launch a “dynamic income fund” dubbed GDIF, focused on investing in proof-of-stake tokens for millionaire investors.

Grayscale Launches GDIF, an Actively Managed Fund for Accredited Investors

Grayscale Dynamic Income Fund $GDIF is our first actively managed investment product. It seeks to optimize income in the form of staking rewards associated with proof-of-stake digital assets.
For important disclosures and more information: https://t.co/v5IR7nJQY1 pic.twitter.com/YTBJzJJbTQ

— Grayscale (@Grayscale) March 29, 2024

According to a post on X, Grayscale has announced the launch of its new fund, identified by the ticker GDIF, which will be available exclusively to accredited investors with a net worth of at least $2.2 million.

GDIF marks Grayscale’s first actively managed investment product, focusing on overseeing the staking and unstaking of multiple tokens and channeling rewards to its investors.

The fund is designed to take advantage of the growing ecosystem of proof-of-stake tokens and will employ dynamic strategies to maximize returns for accredited investors. Its primary objective is to capitalize on staking rewards associated with proof-of-stake digital assets.

In the announcement, Grayscale specified that interests in GDIF will not be registered under the U.S. Securities Act of 1933 or any state securities laws.

“INTERESTS IN GDIF HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 … OR ANY STATE OR OTHER SECURITIES LAW.”

This means that investors in GDIF investments will not benefit from the protections provided by the Investment Company Act and will not be subject to certain restrictions and requirements under this Act.

While Grayscale’s spot bitcoin ETF, regulated by the Securities and Exchange Commission, has seen significant success since its launch in January, GDIF offers a new avenue for investors looking to access the evolving crypto market. Since the beginning of trading in January, the ETF has recorded significant value losses despite remaining the largest in terms of assets managed. 

According to The Block Data Dashboard, Grayscale ranks second in trading volume, behind only BlackRock’s Bitcoin spot ETF.

Grayscale Extends Review Period for Potential Acquisition of EthereumPoW Tokens

On March 16, Grayscale announced its intention to extend the review period to assess the market environment regarding the potential acquisition of EthereumPoW (ETHW) tokens. These tokens emerged after Ethereum’s Merge in September 2022.

During this review period, Grayscale aims to determine if, when, and how it may sell ETHW on behalf of the record date shareholders. The company stated that this review period is not expected to exceed 180 days from the announcement date.

In a preliminary proxy statement filed with the SEC, Grayscale highlighted the fund’s capability to stake ETH through the trust in a Proof-of-Stake (PoS) validation protocol among four proposed items.

According to Samadder, ETC Group’s head of product, spot Ether ETF applicants may have hesitated to include staking in their applications due to the complexity and technical requirements associated with staking and perceived challenges in SEC scrutiny of staking-related risks.

“It is very complex to structure a product and requires a profound knowledge of the Ethereum protocol, the mechanics of ETPs, and the bridge between crypto and traditional capital markets—this takes time.”

He also suggested that there may have been a feeling that the SEC simply “wasn’t ready to properly analyze the risks associated with staking.”

The Merge is a consensus upgrade completed in September 2022, transitioning the Ethereum network from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus algorithm. However, some members of the Ethereum community preferred to continue using the mining-based PoW model, leading to the fork of Ethereum into two separate blockchains: the main PoS-based Ethereum and EthereumPoW.

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