Grayscale announced that we have received approval for the public quotations of eligible shares of Grayscale Horizen Trust, Grayscale Stellar Lumens Trust, and Grayscale Zcash Trust, which means each of the three Trusts have begun trading on the OTCQX market (under symbols HZEN, GXLM, and ZCSH, respectively). These three trusts join Grayscsale’s six other public quotations: GBTC, ETHE, ETCG, BCHG, LTCN, and GDLC.
We had the opportunity to sit down for a quick Q&A with Rayhaneh Sharif Askary, Grayscale’s Director of Investor Relations, to discuss the details and significance of today’s announcement.
Ray, thanks for making the time to help us better understand today’s announcement. Can you please provide a brief overview of what happens now that Grayscale Horizen Trust, Grayscale Stellar Lumens Trust, and Grayscale Zcash Trust have been approved to begin trading on the OTCQX market?
Each Grayscale product starts its life as a private placement, which gives accredited investors the opportunity to buy shares of the product at NAV. Grayscale Zcash Trust (ZCSH), Grayscale Stellar Lumens Trust (GXLM), and Grayscale Horizen Trust (HZEN) have offered a private placement to accredited investors since October 2017, December 2018, and August 2018, respectively.
After private placement shares have been held by these private investors for at least a year (as required under Rule 144), Grayscale works with FINRA and OTC Markets to get the shares publicly quoted on the OTCQX — the top-tier of the three marketplaces for over-the-counter traded stocks.
Once the shares begin to trade on OTC markets, Grayscale private investors may sell their shares to get liquidity, and any market participant with access to a major brokerage account can buy the shares. Unlike the private placement, shares bought on the public market can be bought by any investor, and are not subject to minimum investment amounts or hold periods. Ultimately, investors can trade these stocks just like any other stock in their portfolio.
With the addition of these three products, Grayscale currently has nine products trading on the OTC markets. Historically, several Grayscale products have been among the most liquid stocks in this marketplace.
Is this announcement significant for Grayscale investors? What are the potential benefits for Grayscale’s investors?
This is a significant milestone because with the quotation and trading of these three products — every eligible Grayscale product now has liquidity through the public markets. Eligibility in this case means that all products that have had shares held for the minimum one-year/six month holding period pursuant to Rule 144, have had their compliance with Rule 15c2-11 confirmed, and can therefore trade on the OTC markets.
First and foremost, the public quotations for these particular products provide liquidity for investors who have owned these products for over a year. In some cases, investors have been waiting for several years to have this liquidity opportunity, so I’m thrilled to make good on Grayscale’s intention to get liquidity for these investors.
It also reinforces our commitment to our roadmap, to take each private placement through the multi-step process for greater liquidity and market access, ultimately with the intention of converting the product into an ETF. Hopefully, this gives existing and prospective investors alike confidence that we will continue to strive to obtain quidity through the public markets for all of our products — including LINK, FIL, LPT, MANA, BAT trusts and Grayscale DeFi fund — after they reach their one-year hold period.
Is this something that might also benefit the broader investment community, at large?
Yes! For the first time, all qualified investors can get exposure to Horizen, Stellar Lumens, and Zcash as publicly-quoted securities on a U.S. market. This is especially meaningful in light of the broader trends we’ve seen toward diversification in the asset class.
As adoption of digital assets — and with it investor demand — continues to grow, it’s important for qualified investors to have access to a diverse set of protocols through public markets. With the listing of these products, anyone—not just accredited investors—anywhere in the world with access to a major brokerage account and the U.S. markets can buy these cryptocurrencies in the form of stocks, just like they would with Apple or Amazon stock. They can buy in any size and have full liquidity on day one, which isn’t something that was available before. Historically, while investors could get access to Bitcoin, Ethereum, and some diversified products in the public markets, there wasn’t a way for them to express views around other use cases — in this case privacy (a narrative that continues to gain traction) or payments.
Separately, given that education is a big part of our mission, we’ve created a library of content to help folks learn more about all the protocols underlying our products.
Are folks still able to access ZCSH, GXLM or HZEN as private placements?
At Grayscale, private placements for our fifteen products are open for new subscriptions periodically. You should feel free to email [email protected] to learn more — our team is always happy to discuss.
If folks want to access ZCSH, GXLM or HZEN on the OTCQX market, how do they go about doing that?
Anyone with access to a major brokerage account (Schwab, Fidelity, Interactive Brokers, Vanguard, E-Trade, Ally, Tradestation) can get access by following one of the steps below:
- Log into their individual account, as they normally would to buy any security, and type in “ZCSH,” “GXLM” or “HZEN” to purchase the shares
- Instruct their broker or financial advisor to purchase these securities for their account, also they normally would to buy any stock
- Buy these products through their IRAs and other tax advantaged accounts.
In general, and as applicable, I encourage interested and eligible investors to talk to their IRA providers about Grayscale products.
What, if anything, does this announcement signal about the broader crypto ecosystem?
Just as investors diversify their portfolios across traditional asset classes, we are now beginning to see investors diversify among digital assets. This is encouraging and a sign the digital currency asset class is maturing. That’s why it’s important that the on-ramps, like our public quotations, continue to develop to support the demand for a wider array of digital assets.
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