Understanding Private Placements

To learn more about Grayscale’s products, please contact a portfolio consultant at [email protected] or 866-775-0313.

Grayscale has pioneered the model of providing investors with exposure to crypto in the form of an investment vehicle without the challenges of buying and storing these assets directly. Many of our products are initially offered in a private placement, and from there are intended to progress through a four-phase “lifecycle” when permitted by the regulatory environment: 1. Private Placement, 2. Public Quotation, 3. SEC Reporting, and 4. Exchange-Traded Product (ETP). 

Throughout this lifecycle, Grayscale investors can still periodically invest at net asset value (NAV) by subscribing through the private placement. Shares purchased in a private placement are eligible to be traded on a secondary market, if any, after a 6- or 12-month holding period.¹

For a list of currently available private placements offered at Grayscale, click here.

What Are Some of the Differences Between a Private Placement and a Public Quotation?

*To date, certain Products have not met their investment objectives and the Shares of such Products quoted on OTC Markets have not reflected the value of digital assets held by such Products, less such Products’ expenses and other liabilities, but instead have traded at both premiums and discounts to such value, which at times have been substantial. Investments in the private placement are non transferrable.  Shareholders of such products should be prepared to bear the risk of investment in the shares indefinitely.

The above explains some of the common differences between Grayscale’s private placements and publicly quoted products. This list is not exhaustive and should not be relied on as investment advice nor should it form the basis of an investment decision. This information is provided for illustrative and educational purposes only. 

How Can I Buy a Private Placement?

Accredited investors can learn more about private placements by contacting our team at [email protected] or calling 866-775-0313. 

To begin the investment process, investors first create an account in our portal at Slate by Grayscale. Upon choosing the product they’d like to invest in, investors complete subscription documents and upload relevant documentation. Next, the Grayscale team reviews the application. Once approved, investors may wire for the 4 p.m. NAV on a business day of their choosing.

Who Can Invest in a Private Placement?

Institutional and individual eligible accredited investors may subscribe to private placements at NAV. 

To be considered an accredited investor, you must earn more than $200,000 a year (or $300,000 per year with a spouse or spousal equivalent), have a net worth over $1 million either alone or together with a spouse or spousal equivalent, excluding your primary residence, or hold in good standing your Series 7, Series 65, or Series 82 professional certifications. Entities must have $5 million in liquid assets, or all beneficial owners must be accredited investors.

What Does It Mean for a Private Placement to Be 'Open' or 'Closed'?

When a private placement is open, it means that eligible accredited investors are able to create shares at NAV through the private placement, hold them for the applicable restricted period, and then sell them on a secondary market if such a market is available. Private placements close periodically for administrative, operational, or other reasons. When a private placement is closed, it means that investors cannot purchase shares in the private placement. However, if shares of the applicable private placement are also publicly quoted, investors may continue to gain exposure by purchasing such product’s publicly quoted shares.

What is the Relationship Between a Private Placement and a Public Quotation for the Same Product?

Private placements and public quotations both offer exposure to the underlying crypto asset, but in different ways. To invest in a private placement, an investor must be an accredited investor, invest a minimum amount ($25,000 or $50,000, depending on the product), and agree to a holding period as defined by securities laws. After that holding period, shares are eligible to be sold at the prevailing secondary market price if a secondary market is available. Once private placement shares have existed for at least one year, Grayscale seeks a public quotation for the corresponding product with OTC Markets. Several products currently exist only as private placements, and do not yet have corresponding public quotations.

In comparison, for products whose shares are publicly quoted, investors can buy shares in the public quotation with no accreditation requirement, no holding period, and no minimums. Public quotation shares are both purchased and sold at the prevailing secondary market price, in comparison to private placement shares, which are purchased at the NAV and can be sold at the secondary market price after their holding period.

Once created, private placement shares increase the number of shares outstanding in any given product. Buying shares that are already publicly quoted does not change the number of shares outstanding in the product(s).

Who Can I Contact at Grayscale to Learn More?

If you’re interested in investing in or learning more about a Grayscale private placement, you can kick off this process by starting an application here.

Please reach out to the Grayscale team directly at [email protected] or call 866-775-0313 with any questions.

Disclosures 

All content is original and has been researched and produced by Grayscale Investments, LLC (“Grayscale”) unless otherwise stated herein. No part of this content may be reproduced in any form, or referred to in any other publication, without the express consent of Grayscale.

Grayscale is the parent holding company of Grayscale Advisors, LLC (“GSA”), an SEC-registered investment adviser, as well Grayscale Securities, LLC (“GSS”), an SEC-registered broker/dealer and member of FINRA. Grayscale is not registered as an investment adviser under the Investment Advisers Act of 1940 and none of the investment products sponsored or managed by Grayscale are registered under the Investment Company Act of 1940.

Carefully consider each Product’s investment objectives, risk factors, fees and expenses before investing. This and other information can be found in each Product’s private placement memorandum, which may be obtained from Grayscale and, for each Product that is an SEC reporting company, the SEC’s website, or for each Product that reports under the OTC Markets Alternative Reporting Standards, the OTC Markets website. Reports prepared in accordance with the OTC Markets Alternative Reporting Standards are not prepared in accordance with SEC requirements and may not contain all information that is useful for an informed investment decision. Read these documents carefully before investing.

Investments in the Products are speculative investments that involve high degrees of risk, including a partial or total loss of invested funds. Grayscale Products are not suitable for any investor that cannot afford loss of the entire investment. The shares of each Product are intended to reflect the price of the digital asset(s) held by such Product (based on digital asset(s) per share), less such Product’s expenses and other liabilities. Because each Product does not currently operate a redemption program, there can be no assurance that the value of such Product’s shares will reflect the value of the assets held by such Product, less such Product’s expenses and other liabilities, and the shares of such Product, if traded on any secondary market, may trade at a substantial premium over, or a substantial discount to, the value of the assets held by such Product, less such Product’s expenses and other liabilities, and such Product may be unable to meet its investment objective.

This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.