Grayscale explores the tax implications for spot Bitcoin ETFs.
Grayscale is currently evaluating the potential tax consequences associated with spot bitcoin (BTC) exchange-traded funds (ETFs) following inaccurate reports circulating of inappropriate tax implications.
In a series of posts on X (formerly Twitter), Greyscale explained that retail investors in the Greyscale Bitcoin Trust (GBTC) cannot incur tax implications when the fund sells bitcoins to generate stock compensation funds.
As we work to obtain the appropriate regulatory approval to add $GBTC to the NYSE Arca, we are considering the tax implications of Bitcoin ETFs where you need to sell $BTC holdings for cash to meet share redemptions. Here's why we're talking about this now. (1/7)
— Grayscale (@Grayscale) December 15, 2023
Grayscale says this is because GBTC is structured as a grantor trust, which means the party setting up the trust owns the asset – in this case, the underlying Bitcoin – for income and tax purposes.
Explaining the difference from mutual funds, he explained, “Redemptions of mutual funds are not taxable events for non-redeeming shareholders like retail investors.”
“Unlike mutual funds and many other ETFs, all commodity ETFs (e.g. gold) are structured as grantor trusts for tax purposes. We take the position that GBTC is properly treated as a grantor trust.”
Related: Brazil signs offshore crypto tax bill into law
This follows recent reports that the United States Securities and Exchange Commission (SEC) has held another meeting with Grayscale to further discuss the space's Bitcoin ETF application.
On December 8, Cointelegraph reported that Grayscale and Franklin Templeton sat down with the SEC to review their applications, one day after Fidelity's representatives appeared before the SEC.
Meanwhile, a few days ago, on December 5, the SEC pushed back its decision on Greyscale's spot Ether (ETH) ETF application until January 24, 2024.
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