Founded by Barry Silbert in 2013, Grayscale Investments is a digital asset management firm that is a subsidiary of Silbert’s venture capital firm, Digital Currency Group (DCG), which also owns CoinDesk. Grayscale notably manages the Bitcoin Investment Trust, which is a private investment vehicle wholly devoted to bitcoin, and was the first of its kind in the U.S.
Grayscale also offers investment trusts for bitcoin cash, ethereum, ethereum classic, stellar lumens and litecoin among others. These trusts are modeled on exchange traded funds (ETFs) and the shares represent the value of the underlying crypto asset held by the trust less defined fees and expenses.
For example, as the price of one bitcoin increases, the allotted amount of bitcoin per share will increase in price as well, thus the share price will increase. In addition to single asset funds, Grayscale offers a diversified “‘” that follows a weighted portfolio of bitcoin, ether, XRP, bitcoin cash and litecoin.
By March 2020, Grayscale had accumulated assets under management worth $2.2 billion.
In order to prevent a bank run scenario, Grayscale has a reserve of each currency as a backup to its trust funds. The firm’s assets are stored in cold storage.
While Grayscale’s single-asset trusts are quoted on the OTCQX market under the OTC Market’s Alternative Reporting Standards, the trusts are private investment vehicles. These assets are not insured by the Federal Deposit Insurance Corporation (FDIC) or registered with the US Securities Exchange Commission (SEC), meaning Grayscale is not subject to the agency’s regulatory requirements or publicizing standard price and valuation reports to investors.