Metalpha Launches Grayscale-Based Digital Asset Fund

Metalpha’s Hong Kong-licensed fund will give investors exposure to Grayscale’s products, but also allow for withdrawals which is something currently missing for U.S. investors.

AccessTimeIconApr 12, 2023 at 1:00 a.m. UTC
Updated May 9, 2023 at 4:12 a.m. UTC

Hong Kong’s Metalpha is launching a licensed fund in the territory that will give investors exposure to Grayscale’s digital asset products, including the Grayscale Bitcoin Trust (GBTC), as well as the ability to redeem shares.

Metalpha is calling this fund the "Next Generation Fund", and it is targeting a raise of $100 million with $20 million already committed since it began fundraising in March.

“We are very excited to partner with NextGen Digital Venture on launching the Fund, as we continue to strive for product innovation for our traditional finance clients. Grayscale is one of the largest digital asset fund managers in the world, and we are optimistic about the future growth of Grayscale powered by crypto adoption, said Adrian Wang, President of Metalpha Technology Holding, in a release.

Grayscale is owned by Digital Currency Group, CoinDesk's parent company.

“The reason why our fund is attractive to investors is that it is very common and straightforward to participate and fully compliant with both Hong Kong and U.S. regulations. In addition, against the current bear market, investing in GBTC, for example, can offer more competitive returns to investors,” Wang said in a note to CoinDesk.

Grayscale’s crypto products have traded at a discount since March 2021 because of the widespread availability of bitcoin exchange-traded funds (ETF) and a lack of redemption options for the firm’s crypto trusts. While the GBTC discount hit a record 50% in December, it has currently narrowed to about 36%.

The ability to get exposure to Grayscale’s products – at a discount to market prices – and redeem them should catch the eye of bullish investors with a long time horizon and interest in arbitrage plays.

Investment documents seen by CoinDesk show shares in the fund have a 1.5-year lockup period, but after that time, can be redeemed on specified redemption days which occur monthly.

GBTC is currently trading at a 36% discount over NAV. Bitcoin was recently trading at about $30,290.

Edited by James Rubin.


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