How Grayscale Investments Sells Bitcoin to Financial Advisors

In a webinar hosted by InvestmentNews, Grayscale Investments’ managing director, Michael Sonnenshein, and financial consultant, Tyrone Ross Jr., educated financial advisors about the benefits of crypto investments.

A slide from Sonnenshein’s presentation.

Grayscale offers ten crypto related investment products with its Bitcoin Trust, or GBTC, being by far the largest. Currently, it holds close to 400,000 BTC, though lately, the demand for the product has subsided.

Physical representations of Bitcoin called into question

Quite a bit of time was spent on some well known aspects of Bitcoin, like its finite supply and instant settlement capabilities. Sonnenshein also informed the audience that physical representations of the asset are not real:

“And one thing that’s certainly important for you all as advisors and in the investment community is that you oftentimes will see physical adaptations or representations of Bitcoin. But there is, in fact, no tangible Bitcoin.”

Wealth transfer to millennials

Sonnenshein drove home that the millennial generation purportedly have quite an appetite for Bitcoin. A few surveys were cited:

“There have been some other studies done by Bankrate and Edelman, and ETF Trends, where we’ve actually seen that millennials are either five times more likely to invest in Bitcoin <...> [or] the percentage of the younger generation are really allocating towards cryptocurrency or expect to be doing so in the near term.”

Regulatory clarity

Another important theme was regulation. Sonnenshein acknowledged that in the past, the lack of regulatory clarity was preventing investors from entering the space, but in his opinion, this is no longer a valid excuse:

“But we’ve come to the conclusion that that can really no longer be an excuse for investors.”

He noted that the IRS has designated Bitcoin as property and the Commodity Futures Trading Commission’s guidelines have allowed for the robust futures markets and even the Federal Reserve comparing it to gold.

Seashells, Coinbase & solid planning

Ross chimed in by explaining to the audience that it does not matter if they believe Bitcoin to be seashells, what matters is that they give sound financial advice to their clients:

“I don’t care whether you think it’s seashells or whatever, that’s fine. But at least when the client comes to you, hey, I own some at Coinbase, you can give them a very articulate answer as to why that’s nonsense or to why it’s something that you want to continue to articulate in the broader scope of a financial plan or quarterly fair financial plan.”

Accredited investors can buy direct without the premium

Sonnenshein answered one of the community’s existential questions about the GBTC — why is there such a high premium over the BTC spot price? He explained that accredited investors can purchase newly issued shares of GBTC directly from Grayscale at the net asset value. The premium is dictated by the supply and demand for GBTC on secondary markets. He further noted that Grayscale’s crypto products allow investors to gain exposure to digital assets without having to deal with the entry barriers like wallet management.