Fortune Article

Finance spawns a lot of weird and wonky words, and while I’ve at least heard of most of them, “uplist” is a new one for me. I encountered it while poking into crypto giant Grayscale’s bid to be first out of the gate with a Bitcoin ETF—an achievement that would likely help the crypto giant nab the lion’s share of a new market expected to be worth hundreds of billions of dollars.

While other firms, notably BlackRock and Fidelity, are seeking a similar prize, Grayscale is the only one in a position to do it by means of an uplist. The term refers to moving a securities listing from an off-brand stock exchange onto a mainstream one. In Grayscale’s case, this would mean moving its GBTC shares from something called OTCQX to the familiar confines of the NYSE, while at the same time converting its jerry-rigged trust product to a regular old ETF.

A source at Grayscale tells me that launching via an uplist means the firm could bring its ETF to market slightly quicker than its competitors—a critical advantage since, historically, the first ETF in a given field sucks up most of the liquidity. I have no idea if this will happen (and would point any diehards to the X feeds of Bloomberg ETF guys Eric Balchunas and James Seyffart or lawyer Scott Johnsson). But it does underscore how much is at stake with the long-awaited arrival of Bitcoin ETFs, which are widely expected to drop in early January based on the whims of the SEC.

Meanwhile, there are other wild cards surrounding Grayscale’s ETF bid, including what the company plans to charge. It’s a safe bet the fee will be lower than the 2% it’s long charged for GBTC, especially as one of its competitors in the ETF race, ARK Invest, says it will charge 0.8%. Competitive dynamics suggest Grayscale would have to match that rate, but the reality is the firm is likely to charge more since most customers tempted to exchange Grayscale’s Bitcoin ETF for a competitor’s would set off a tax trip wire—meaning many will choose to grit their teeth and hold instead.

The final wild card in all this is how many of those currently holding GBTC shares will simply dump them once the ETF drops, and ditch the Bitcoin game altogether. Recall that a sizable group of investors bought Grayscale shares as an arbitrage when they were trading far below the price of Bitcoin in hopes the gap would close. That has happened—the so-called discount has closed from over 40% to 8% and is likely to disappear altogether—meaning some investors are going to take their crypto profits and go take a flier on AI or something else totally unrelated. JPMorgan recently predicted outflows will amount to around $2.7 billion.

All of this is just conjecture for now. But January, and some real answers, are only weeks away.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

A U.S. judge has for now refused to let Binance’s former CEO return to the United Arab Emirates ahead of his sentencing date in February, and will likely make a decision in the coming days. (Bloomberg)

The price of several large altcoins, including SUI and Optimism, tumbled ahead of impending “unlock” events that will see a glut of new tokens enter the market. (CoinDesk)

Tom Emmer (R-Minn.), an influential GOP congressman, said the recent DOJ charges against Binance prove the U.S. doesn’t need new crypto laws—a stance that could bode ill for pending stablecoin bills. (Fortune)

Star author and Sam Bankman-Fried acolyte Michael Lewis is under fire for comparing reporters covering the trial of the convicted fraudster to those attending a lynching party. (Puck)

Coinbase shares have soared 18% following criminal charges against Binance, which led CEO Brian Armstrong to take a victory lap in the media. (Fortune)