Grayscale's IPO changes the way investors approach the $35 billion fund.

Grayscale has submitted the S-1 form to the SEC on November 13 to list Class A common stock on the New York Stock Exchange with the ticker GRAY.

The company currently manages approximately 35 billion USD through more than 40 crypto products, including spot Bitcoin and Ethereum ETFs. When it becomes a public company, Grayscale will have to be more transparent about its financial situation and face pressure from shareholders, factors that could affect its fee policy as well as its product strategy in the future.

The current filing does not disclose the number of shares being offered or the price range. Morgan Stanley, BofA Securities, Jefferies, and Cantor will act as the lead underwriters.

Financial efficiency reflects revenue pressure

In the 9 months ending September 30, Grayscale reported revenue of $318.7 million, down from $397.9 million in the same period of 2024. Net profit reached $203.3 million, lower than the $223.7 million from the previous year. The operating margin during the period was 65.7%.

The average management fee decreased to 1.39% from 1.67% due to strong competition from BlackRock and Fidelity's low-cost ETFs. Average assets under management fell from 31.8 billion USD to 30.6 billion USD.

The results for 2024 show that revenue and net profit reached 506.2 million USD and 282.1 million USD, respectively, both lower than in 2023. The main reasons are the reduced management fees, capital outflows, and distributions.

Two-tier stock structure retains control for DCG

The offering uses a two-class stock model: the Class B shares of Digital Currency Group (DCG) have 10 voting rights for each share, while Class A has only 1. DCG expects to hold about 70% of the voting rights after the IPO through the Class B shares — although these shares do not have the right to profit.

This structure allows Grayscale to qualify as a “controlled company” under NYSE regulations and be exempt from certain governance requirements. The super voting rights of Class B will terminate if DCG's ownership falls below 20% of the total outstanding shares.

The impact on ETF investors remains indirect

IPO does not change the legal structure, asset supervision mechanism, or the operations of the current trust funds and ETFs. The fund assets are still custodied by independent parties according to individual agreements.

Grayscale stated that the restructuring into a parent company model in Delaware at the beginning of 2025 will not have a significant impact on the operation of the funds. The entire amount raised from the IPO will be used to buy back the ownership stakes of existing members in Grayscale Operating, rather than investing further in fund operations or changing fee levels.

A portion of the IPO shares is allocated to qualified investors of GBTC and ETHE through the priority share distribution program. Investors must hold GBTC or ETHE before October 28 and complete registration by November 24. The program does not guarantee allocation and does not apply a trading lock period.

The public listing will require Grayscale to report its financials periodically, giving ETF investors a clearer view of the parent company's financial health, legal risks, and product concentration. The filings also indicate that decisions related to fees and product expansion strategies will be subject to greater scrutiny from public shareholders amid increasing competition in the ETF space.

Thach Sanh