What You Need to Know About Spin-Offs

Last Update 07/08/2024

What do we mean by “spin-off”? 

While “spin-off” (or “spinout”) can mean different things in business and investing, we use the term to refer to a portion of a larger product being moved or “spun out” to create a smaller product. 

This simply means that a portion of the tokens underlying the shares of a larger product will be used to seed a new and potentially lower-cost product — i.e., a spin-off fund. Following a spin-off, both the original and the new funds will trade independently, providing investors with more options to suit their individual needs.

To learn more about the mechanics of the spin-off process, check out this short video:

 

 

How would a spin-off affect me?

A spin-off will affect all shareholders of an original fund at the close of business on the publicly announced record date.

If you are a shareholder, you will automatically receive one share of the spin-off fund for each share of the original fund, and your account will reflect your updated ownership of shares of both funds. The total value of the assets underlying your investment won’t change. In some cases, you will automatically benefit from a lower blended fee, given the spin-off fund’s lower expense ratio.

What would I need to do?

Nothing! If Grayscale announces a spin-off, you won’t need to take any action. The distribution of shares will be automatic as of the announced distribution date, though it may take several days after that date for you to see the new shares in your investment account.

Why would we conduct a spin-off?

Spinning off part of a larger product is intended to give investors greater choice: between a lower-fee product and a product with greater liquidity and a longer track record. As the world’s largest crypto-focused asset manager*, we understand how important it is to you to gain exposure to crypto funds in multiple ways.

*As of 6/28/2024

DISCLOSURES

Investments in digital assets are speculative investments that involve high degrees of risk, including a partial or total loss of invested funds. Investments in digital assets are not suitable for any investor that cannot afford loss of the entire investment.

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This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any investment in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change. This content does not constitute an offer to sell or the solicitation of an offer to sell or buy any security in any jurisdiction where such an offer or solicitation would be illegal. There is not enough information contained in this content to make an investment decision and any information contained herein should not be used as a basis for this purpose.

This content does not constitute a recommendation or take into account the particular investment objectives, financial situations, or needs of investors.

Investors are not to construe this content as legal, tax or investment advice, and should consult their own advisors concerning an investment in digital assets. The price and value of assets referred to in this content and the income from them may fluctuate. Past performance is not indicative of the future performance of any assets referred to herein. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments.

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There is no guarantee that the market conditions during the past period will be present in the future. Rather, it is most likely that the future market conditions will differ significantly from those of this past period, which could have a materially adverse impact on future returns. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. We selected the timeframe for our analysis because we believe it broadly constitutes the most complete historical dataset for the digital assets that we have chosen to analyze.

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