Investment Objective
Grayscale Livepeer Trust (the "Trust") is one of the first securities solely invested in and deriving value from the price of Livepeer Token ("LPT") that enables investors to gain exposure to LPT in the form of a security while avoiding the challenges of buying, storing, and safekeeping LPT, directly. Shares of the Trust (based on LPT per Share as indicated below) are designed to track the LPT market price, less fees and expenses. Grayscale Livepeer Trust's investment objective is for the value of the Shares (based on LPT per Share) to reflect the value of LPT held by the Trust, determined by reference to the Reference Rate Price, less the Trust’s expenses and other liabilities. While an investment in the Shares is not a direct investment in LPT, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to LPT. LPT is an ERC-20 token and serves as the native asset of the Livepeer Network which is an application built on the Ethereum Network that is used to coordinate work through staking.
To date, the Product has not met its investment objective and the Shares of the Product quoted on OTC Markets Group has not reflected the value of digital assets held by the Product, less the Product’s expenses and other liabilities, but instead have traded at both premiums and discounts to such value, with variations that have at times been substantial.
The Reference Rate is a U.S. dollar-denominated composite reference rate for the price of Livepeer Token (LPT). The Reference Rate is designed to provide a semi real-time, volume-weighted value of LPT. The Reference Rate Price is determined by the Reference Rate Provider through a process in which trade data from the Digital Asset Trading Platforms included in the Reference Rate is compiled to calculate a volume-weighted average price.
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Grayscale offers multiple types of investment products, all of which can be found in the All Products page of our website.
The following FAQs apply to our digital asset investment products only. FAQs about our other products can be found on their respective product pages.
Grayscale’s digital asset investment products (Products) include single-asset trusts, which provide investors with exposure to a singular cryptocurrency, and diversified funds, which provide investors with exposure to a basket of cryptocurrencies. The diversified funds track thematic indices and are rebalanced on a quarterly basis.
Each Product is intended to follow a four-stage life cycle — with the ultimate goal of uplisting the Product to an ETF*. As a Product progresses through this intended lifecycle, there is a correlated increase in investor access and transparency.
Stage 1: Private Placement
Grayscale Products first launch as private placements, allowing accredited investors to gain crypto exposure through a familiar investment vehicle structure.
Shares purchased in the private placements are initially restricted for one year.
Stage 2: Public Quotation
Grayscale pioneered obtaining public quotations for unrestricted shares of our private placements. This provides liquidity to existing private placement investors by allowing them to continue to hold their shares in their brokerage account or sell them through their broker in the public market.
This also allows all investors —accredited or not — to access Grayscale products through certain brokerage or retirement accounts, regardless of investment size or holding period.
Due to the lack of an ongoing redemption program, publicly traded shares may trade premiums or discounts to the value of their underlying assets.
Stage 3: SEC Reporting
Grayscale Products are the first SEC-reporting companies in the industry. The requirements of being SEC-reporting exceed the standard of reporting already met by these Products as OTC Markets public quotations, including heightened levels of disclosure to offer even greater transparency for investors, and subjects the Products to additional regulatory oversight.
This also reduces the initial one year holding period of the private placement to six months.
Stage 4: ETF
Grayscale believes its SEC-reporting Products present a strong case for uplisting when permitted by the U.S. regulatory environment.
In connection with ETF uplisting, products would have ongoing creation and redemptions, and the arbitrage mechanism inherent to ETFs would help the product more closely track the value of its underlying Bitcoin holdings, after deduction of expenses.
*We use the generic term “ETF” to refer to exchange-traded investment vehicles, including those that are required to register under the Investment Company Act of 1940, as amended (the “‘40 Act”), as well as other exchange-traded products, or “ETPs”, which are not subject to the registration requirements of the ‘40 Act.
*We use the generic term “ETF” to cover exchange-traded investment vehicles that are required to register under the Investment Company Act of 1940, as amended (the “‘40 Act”), also commonly referred to as “exchange-traded funds” or “ETFs”. The term “ETF” also encompasses “exchange-traded products” or “ETPs”, like GBTC would be, that are not subject to the registration requirements of the ‘40 Act. ETFs trade in line with NAV as a result of the simultaneous creation and redemption mechanism available.
What is a private placement?
Shares of Grayscale Products are offered to institutional and individual accredited investors* in private placement transactions exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Rule 506(c) thereunder.
Each Product’s investment objective is for the value of its shares (based on digital assets per share) to reflect the price performance of such Product’s underlying digital asset(s), less fees and expenses.** Modeled after popular commodity investment products, each Product was created for investors seeking exposure to digital assets through a familiar investment vehicle.
*Grayscale’s private placements are only available to Accredited Investors as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended. Most individuals are not Accredited Investors. An individual 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 their primary residence, or hold in good standing their 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.
**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.
What is a public quotation?
Shares of certain Products are publicly quoted on OTC Markets. Shares that have become unrestricted in accordance with SEC Rule 15c2-11 may be bought and sold by retail investors throughout the day via their brokerage accounts.
Investors of Grayscale’s public quotation Products receive annual and quarterly reports and financial statements pursuant to OTC Markets’ Alternative Reporting Standards (ARS).
What is an SEC Reporting Company?
An SEC reporting company is an issuer of securities that is subject to the periodic and current reporting requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act).
The Exchange Act contains ongoing disclosure requirements designed to keep investors informed on a current basis of information concerning material changes in the financial condition or operations of the issuer. The requirements include an obligation to file annual reports and financial statements on Form 10-K, quarterly reports and financial statements on Form 10-Q, and current reports on Form 8-K with the SEC.
For more information, please refer to the SEC public filing documents.
What is an exchange-traded fund (ETF)?
ETFs are a basket of assets which can track a particular index, sector, commodity, or other underlying asset, and its shares can be purchased or sold on a national stock exchange. ETFs are able to track the price of their underlying assets because of an arbitrage mechanism which allows market participants to create shares when there is a premium and redeem shares when there is a discount, thus allowing shares of the fund to trade closely in line with their net asset value.
Per Grayscale’s four-stage Product life cycle, Products are designed to be uplisted to ETFs when permitted by the U.S. regulatory environment.
GAAP AUM and GAAP NAV Per Share represents the applicable Product’s principal market price and is calculated using a GAAP methodology. For additional information, see the applicable Product’s financial statements.
Grayscale's Product Lifecycle
Grayscale Products first launch as private placements, allowing accredited investors to gain crypto exposure through a familiar investment vehicle structure.
Shares purchased in the private placements are initially restricted for one year.
MORE ABOUT THIS STAGE
FAQGrayscale pioneered obtaining public quotations for unrestricted shares of our private placements. This provides liquidity to existing private placement investors by allowing them to continue to hold their shares in their brokerage account or sell them through their broker in the public market.
This also allows all investors —accredited or not — to access Grayscale products through certain brokerage or retirement accounts, regardless of investment size or holding period.
Due to the lack of an ongoing redemption program, publicly traded shares may trade premiums or discounts to the value of their underlying assets.
MORE ABOUT THIS STAGE
FAQGrayscale Products are the first SEC-reporting companies in the industry. The requirements of being SEC-reporting exceed the standard of reporting already met by these Products as OTC Markets public quotations, including heightened levels of disclosure to offer even greater transparency for investors, and subjects the Products to additional regulatory oversight.
This also reduces the initial one year holding period of the private placement to six months.
MORE ABOUT THIS STAGE
FAQGrayscale believes its SEC-reporting Products present a strong case for uplisting when permitted by the U.S. regulatory environment.
In connection with ETF uplisting, products would have ongoing creation and redemptions, and the arbitrage mechanism inherent to ETFs would help the product more closely track the value of its underlying Bitcoin holdings, after deduction of expenses.
*We use the generic term “ETF” to refer to exchange-traded investment vehicles, including those that are required to register under the Investment Company Act of 1940, as amended (the “‘40 Act”), as well as other exchange-traded products, or “ETPs”, which are not subject to the registration requirements of the ‘40 Act.
MORE ABOUT THIS STAGE
FAQ