Grayscale’s parent company reported revenue growth of 11% for the quarter

What’s new? Barry Silbert’s cryptocurrency conglomerate Digital Currency Group (DCG), which owns investment firm Grayscale, has reported an 11% increase in revenue to $229 million for the first quarter. Grayscale’s revenue was $156 million, virtually unchanged from the previous reporting period, despite significant outflows from its GBTC spot bitcoin exchange-traded fund (ETF), which was converted from a trust and launched on the NYSE on January 11 of this year.

CoinDesk’s material

What else is known? In a letter to shareholders, DCG writes “While Grayscale expected outflows alongside increased competition under the ETF wrapper, Q1 revenue attributable to GBTC nevertheless exceeded our expectations.” Much of the outflows were offset by growth in the crypto market. Bitcoin has added 50% since the beginning of the year and hit an all-time high above $73 500 on March 14.

DCG’s other two businesses, Foundry mining pool, and investment platform Luno, saw revenue growth of 35% and 46% from January through March, respectively.

DCG called the start of the year “successful,” noting that compared to Q1 2023, the conglomerate's total revenue growth was 51%, while the BTC exchange rate jumped 134% over the same time.

Grayscale CEO: We will focus on converting ETH trust into spot products

Earlier, the firm withdrew its application to launch a futures fund

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GBTC, which had operated as a closed-end fund for ten years, was converted to a spot ETF after Grayscale won a lawsuit against the US Securities and Exchange Commission (SEC), which had long refused to allow such products on the market. Along with GBTC, ten new ETFs from investment firms BlackRock, Fidelity, and others were admitted to stock exchanges.

Grayscale set the highest management fee of 1,5% compared to its competitors, and GBTC has experienced an outflow of funds since its launch, which has now reached $18 billion. GBTC is still the largest spot bitcoin fund, holding bitcoins worth $18б18 billion.

Its closest competitor is IBIT from the world’s largest investment company BlackRock, the fund has seen a steady inflow of funds that has reached $15 billion and manages bitcoins worth $17б11 billion. Overall, all funds except GBTC have maintained a positive fund flow result since the start of trading.

The company later filed an application with the SEC to launch the Grayscale Bitcoin Mini Trust ETF, an additional fund where GBTC assets will be invested. It will charge just a 0,15% management fee, the lowest fee in the segment, and will attract a wider range of investors.

DCG repays $700 million in debt to bankrupt brokerage subsidiary Genesis

In just one year, the conglomerate repaid $1 billion in short-term loans

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DCG also owned broker Genesis, which went bankrupt early last year with liabilities of up to $11 billion. It owed about $1 billion to customers of the US crypto exchange Gemini, who lent the broker assets at interest. The SEC called the lending program an unregistered offering of securities and fined Genesis $21 million.

In February of this year, the court allowed Genesis to sell $1,3 billion worth of GBTC fund shares to reimburse creditors, and the broker later submitted a plan to the court to return 100% of the funds to Gemini customers.