GBTC consent window closed on operational changes ahead of ETF decision

The shareholder consent window for Grayscale Bitcoin Trust closed at 4:00 p.m. New York City time on January 7, 2024, ending a governance process over two changes intended to modernize GBTC’s operations while its proposed conversion to a spot bitcoin exchange-traded product remained before the U.S. Securities and Exchange Commission.

The deadline mattered because GBTC was not a new fund waiting to be seeded. It was an established bitcoin trust attempting to change how it operated and how creations and redemptions could be handled. The amendments addressed internal mechanics needed for a more ETF-like operating model, but Grayscale’s own proxy statement was explicit: neither proposal was a prerequisite for SEC approval or for operating as an ETF.

As of the January 7 cutoff, the publicly knowable fact was that the consent period had ended. The final tally and implementation had not yet appeared in an SEC filing, and the SEC had not approved GBTC’s conversion.

What shareholders were asked to approve

Grayscale opened the solicitation on December 18, 2023. Its record showed 692,370,100 GBTC shares outstanding on that date. Each proposal required consent from holders of more than 50% of the outstanding shares. Under the trust agreement, a shareholder who did not submit a written objection within 20 calendar days was deemed to consent, making silence part of the voting mechanism rather than evidence of an affirmative ballot.

Proposal 1 changed the sponsor’s fee from payable monthly in arrears to payable daily in arrears. Grayscale said the fee already accrued daily, so the proposal altered payment frequency, not the fee amount. The sponsor also retained discretion over when to instruct the custodian to withdraw bitcoin for accrued but unpaid fees.

Proposal 2 permitted part of the trust estate to be held temporarily in one or more omnibus accounts to facilitate share creations and redemptions through prime-brokerage services. Grayscale said bitcoin connected with pending orders could be commingled for limited periods. It also disclosed the tradeoff: bitcoin in a prime broker’s omnibus account would not be segregated, and the trust would be an unsecured creditor for that bitcoin if the prime broker became insolvent. Grayscale said it intended to keep substantially all bitcoin unrelated to pending creation or redemption orders in segregated custody.

Why the deadline mattered

The consent cutoff arrived after exchanges submitted amended rule filings on January 5, 2024, for several proposed spot bitcoin products. That broader filing activity signaled that issuers and exchanges were addressing final structural details, but it did not guarantee a Commission vote or approval. For GBTC, the January 7 event removed a scheduled internal-governance checkpoint while leaving the decisive regulatory questions unresolved.

The distinction was important. Shareholder authority could enable Grayscale and its trustee to change the trust agreement; it could not authorize NYSE Arca to list the converted product, make GBTC’s registration statement effective, or substitute for SEC action. Any claim on January 7 that GBTC had already become an ETF would therefore have exceeded the contemporaneous record.

Later-confirmed record

A Form 8-K filed on January 9, 2024, later confirmed that sufficient consent had been obtained by the January 7 deadline. Grayscale reported aggregate consent from holders of 98.5% of outstanding shares for Proposal 1 and 96.8% for Proposal 2, figures that included the trust agreement’s deemed-consent mechanism. Grayscale and the trustee executed the amended trust agreement on January 9.

On January 10, 2024, the SEC approved exchange rule changes for a group of spot bitcoin exchange-traded products, including GBTC’s conversion. Those later actions clarify the significance of the January 7 governance milestone; they were not facts available at the deadline itself.