Finance spawns a lot of weird and wonky words and, while I've at least heard of most of them, "uplist" is a new one for me. I encountered it while poking into crypto giant Grayscale's bid to be first out of the gate with a Bitcoin ETF—an achievement that would likely help the crypto giant nab the lion's share of a new market expected to be worth hundreds of billions of dollars.
While other firms, notably BlackRock and Fidelity, are seeking a similar prize, Grayscale is the only one in position to do it by means of an uplist. The term refers to moving a securities listing from an off-brand stock exchange onto a mainstream one. In Grayscale's case, this would mean moving its GBTC shares from something called OTCQX to the familiar confines of the NYSE, while at the same time converting its jerry-rigged trust product to a regular old ETF.
A source at Grayscale tells me that launching via an uplist means the firm could bring its ETF to market slightly quicker than its competitors—a critical advantage since, historically, the first ETF in a given field sucks up most of the liquidity. I have no idea if this will happen (and would point any diehards to the X feeds of Bloomberg ETF guys Eric Balchunas and James Seyffart or lawyer Scott Johnsson). But it does underscore how much is at stake with the long-awaited arrival of Bitcoin ETFs, which are widely expected to drop in early January based on the whims of the SEC.
Meanwhile, there are other wildcards surrounding Grayscale's ETF bid, including what the company plans to charge. It's a safe bet the fee will be lower than the 2% it's long charged for GBTC, especially as one of its competitors in the ETF race, ARK Invest, says it will charge 0.8%. Competitive dynamics suggest Grayscale would have to match that rate, but the reality is the firm is likely to charge more since most customers tempted to exchange Grayscale's Bitcoin ETF for a competitor's would set off a tax tripwire—meaning many will choose to to grit their teeth and hold instead.
The final wildcard in all this is how many of those currently holding GBTC shares will simply dump them once the ETF drops, and ditch the Bitcoin game altogether. Recall that a sizable group of investors bought Grayscale shares as an arbitrage when they were trading far below the price of Bitcoin in hopes the gap would close. That has happened—the so-called discount has closed from over 40% to 8% and is likely to disappear altogether—meaning some investors are going to take their crypto profits and go take a flyer on AI or something else totally unrelated. JPMorgan recently predicted outflows will amount to around $2.7 billion.
All of this is just conjecture for now. But January, and some real answers, are only weeks away.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
