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Safety, Security, and Transparency

Last Update 11/18/2022

Due to recent events, investors are understandably inquiring deeper into their crypto investments. Custody of the digital assets underlying Grayscale’s digital asset products is unaffected, and our products’ digital assets remain safe and secure. We take transparency seriously, and have a long history of working constructively with regulators to create and strengthen full and fair risk disclosures for our digital asset products. In that spirit, we affirm the following, as of November 18, 2022: 


  • The holdings of Grayscale’s digital asset products are safe and secure. Balances are reflected in historical public filings and have been evaluated by our third-party auditors.
  • Each of Grayscale’s digital asset products is set up as a separate legal entity: a statutory trust for single asset products, and limited liability company for diversified products.
  • All digital assets that underlie Grayscale’s digital asset products are held by Coinbase Custody Trust Company, LLC (Coinbase Custody) as custodian for each product. A letter that verifies the number of digital assets held by Coinbase Custody for each of Grayscale’s digital asset products can be found below.
  • The organizational documents governing each of Grayscale’s digital asset products, as well as the custodian agreement with Coinbase Custody, prohibit the digital assets underlying the products from being lent, borrowed, or otherwise encumbered.


Let’s dig a little deeper:


Product Structure

Each Grayscale digital asset product is structured as a separate legal entity – a statutory trust for each single asset product, and a limited liability company for each diversified digital asset product – sponsored or managed by Grayscale Investments, but ultimately owned by the product’s shareholders. For example, this means that Grayscale Bitcoin Trust (OTCQX: GBTC) holds bitcoin — and only bitcoin — and each share is backed by a proportional amount of the trust’s holdings, approximately 0.00091502 BTC per share of GBTC, as of November 18, 2022. To be perfectly clear: these digital assets are owned by GBTC and GBTC alone.  


Grayscale’s nine largest digital asset products are SEC reporting companies that file publicly available Forms 10-K, 10-Q, and 8-K. With each Form 10-K and 10-Q, Grayscale’s CEO and CFO certify that such reports meet the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and fairly present, in all material respects, the financial condition and results of operations of each product, among other certifications, as required by the Sarbanes-Oxley Act of 2002. Annual financial statements for these products are audited according to U.S. generally accepted accounting principles (GAAP). These products’ public filings are available at the links below: 



Additionally, we provide GAAP audited financial statements in compliance with the highest reporting standards prescribed by OTC Markets, the Alternative Reporting Standards, for five of our newer publicly traded digital asset products:



We also directly provide investors with GAAP audited financial statements pursuant to each product’s governing documents for our three newest private placement-only products, which are not currently publicly traded.

(Grayscale may attempt to have the shares of new products quoted on a secondary market. Although the shares of certain Grayscale products have been approved for trading on a secondary market, such as OTCQX, investors in a new product should not assume that the shares will ever obtain such an approval because of questions the SEC and/or FINRA may have regarding the status of the product’s underlying digital assets under the federal securities laws.) 




All digital assets that underlie Grayscale’s digital asset products are custodied with Coinbase Custody. As background, Coinbase Custody is a wholly-owned subsidiary of Coinbase Global, Inc. (NASDAQ: COIN), and is licensed to custody client digital assets as a New York-chartered limited purpose trust company. Coinbase Custody has been regulated by the New York State Department of Financial Services since 2018, the same regulator that oversees some of the United States’ biggest banks. Coinbase Custody also services as a fiduciary, which means that it is required to always act in its clients’ best interest under the New York Banking Law. 

Coinbase Custody frequently performs on-chain validation as part of their custodian operations.  Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure. 

Coinbase Custody is also obligated under the terms of the custodian agreement in place with each Grayscale product to fulfill a number of critical operational practices that ensure that the digital assets underlying each Grayscale product are safe.

Coinbase shared more information about our relationship for Grayscale’s investors and indicated the exact quantity of digital assets underlying each of our digital asset products in the letter below. 

Sanctity of Assets

Grayscale and Coinbase Custody are prohibited from borrowing, lending, rehypothecating, or otherwise encumbering the products’ underlying assets pursuant to the terms of the trust agreement or limited liability company agreement governing each digital asset product. No other entity, including DCG, Genesis, nor any other Grayscale affiliate, has any control over the digital assets underlying the Grayscale products. Each of our products carries identical prohibitions to those outlined in GBTC’s trust agreement :

As custodian, Coinbase Custody is also prohibited from engaging in such activity, as outlined in the products’ corresponding custody agreements. Keeping with GBTC’s custody agreement, as an example:

Crypto captivated many investors not only for the investment opportunity, but because of a shared belief that decentralization matters, financial inclusion matters, and self-sovereign digital money matters. There is a whole community of talented individuals and developers who continue to work together to achieve this vision. As always, Grayscale remains committed to providing investors with access to this ecosystem through a suite of accessible, secure, and future-forward investment products.

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