As of late 2017, GBTC was the largest bitcoin ETF by assets under management and the only one available to trade on a major U.S. stock exchange.4 The fund’s objective is for the NAV to track the market price of bitcoin, less fees and expenses.

The fund holds actual bitcoins—not futures contracts or other derivatives—and is fully invested in bitcoin. GBTC is one of the few ways for investors to gain exposure to bitcoin without buying the underlying cryptocurrency directly.

The value of GBTC shares relates directly to the price of bitcoin and changes daily as bitcoin’s price fluctuates. When investors buy GBTC, they are buying shares in a trust that owns bitcoin and is tasked with holding it safely.

The trust’s sponsor is Grayscale Investments, LLC, a wholly-owned subsidiary of Digital Currency Group, Inc., which itself has close ties with Barry Silbert, a well-known figure in the digital currency community who also founded DCG.5.

The GBTC trust is one way to own bitcoin without having to deal with the challenges of buying, storing, and safekeeping the actual cryptocurrency. For example, investors don’t need to worry about digital wallets or keeping their digital currency offline in so-called “cold storage.” But there are some trade-offs. First, GBTC charges high fees—2% annually—compared to other ETFs.

Second, because GBTC isn’t an actual exchange-traded fund (ETF), it isn’t subject to the same regulatory scrutiny as other ETFs. As such, there’s no guarantee that GBTC will continue to trade on a U. stock exchange or that its shares will maintain their current value.

Investors should be aware that GBTC trades at a significant premium to its NAV.6 For example, at the end of December 2017, one share of GBTC was worth nearly $19 while each bitcoin was priced at around $16,500—meaning each share represented approximately 0.

00012 bitcoins or 12 bitcoins per 10,000 shares outstanding (known as “tenths of bitcoins”).7 This premium has ranged from 2% to more than 30%,8 depending on market conditions and investor demand but has generally been inching upward over time as more investors have sought exposure to bitcoin through traditional financial channels such as GBTC rather than buying it directly on a cryptocurrency exchange (which can be complicated and expensive).9 .

The bottom line: Does GBTC own Bitcoin?
Yes, GBTC does own Bitcoin and it is one way for investors to get exposure to Bitcoin without having to buy it directly on a cryptocurrency exchange.