DCG announces $250 million share buyback of several Grayscale crypto trusts

Digital Currency Group (DCG) has announced plans to buy back $250 million in shares of several Grayscale crypto trusts amid continued negative premiums for these products.

According to an announcement issued on Wednesday, the $250 million repurchase plan is split into two separate buybacks. The first buyback covers up to $50 million in total for shares of Grayscale Litecoin Trust ($30 million), Grayscale Horizen Trust, and Grayscale Zcash Trust. 

The remaining $200 million could be used for buybacks of any of the other six publicly-traded Grayscale products including the company’s flagship Grayscale Bitcoin Trust (GBTC).

Wednesday’s announcement increases the limit of its share buyback program for Grayscale products. As of October 2021, DCG’s limit stood at $1 billion for GBTC shares alone. According to today’s announcement, only $301.3 million remains unspent in GBTC share buybacks.

The share repurchase announcement also comes amid significant negative premiums for the six publicly-traded Grayscale products. Data from otcnode shows that all six are in negative premiums, the highest of which is the Ethereum Classic Trust at -58%.

These negative premiums for Grayscale’s crypto trusts mean that shares of the product are trading at a discount when compared to the net asset value. GBTC has been trading at a discount to the bitcoin NAV since February 2021, according to The Block’s Data Dashboard.

These buybacks are seen as a way to supply some demand for Grayscale’s crypto trusts. Meanwhile, Grayscale is working to convert its GBTC product to a full-fledged bitcoin exchange-traded fund (ETF) as part of its broader crypto ETF push.

The US Securities and Exchange Commission (SEC) has so far delayed its decision on whether to approve or reject Grayscale’s bitcoin ETF filing.