Wealthfront Adds Grayscale Bitcoin, Ethereum Shares

Wealthfront Adds Grayscale Bitcoin, Ethereum Shares
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Wealthfront will now let customers allocate to Grayscale’s GBTC and ETHE products.

Wealthfront Adds GBTC and ETHE

Wealthfront, a California-based investment firm with $25 billion assets under management, will give customers exposure to Bitcoin and Ethereum via Grasycale’s trust shares.

The financial services firm announced the update Thursday. Customers will be allowed a maximum of 10% combined allocation in GBTC and ETHE shares based on their preferences. 

Wealthfront provides personalized and automated investment portfolios for individuals based on their risk appetite and income tax liabilities. It offers investments in stocks, commodities, and various other financial products for a tax-balanced portfolio.

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Wealthfront claims to be the first service of its kind to allow exposure to cryptocurrencies in investment portfolios. The firm uses automated financial software for calculating the percentage allocations in its investment portfolios and makes trades accordingly to avoid losses or heavy tax burdens. 

The 10% limit on crypto investments will provide a hedge against the volatility of Bitcoin and Ethereum. Grayscale’s trust shares represent BTC and ETH held in the trust’s custody. The shares are non-redeemable, incur 2 to 3% management fees, and come with a six-month lock-up period, meaning institutional investors are unable to sell their shares until six months after purchase.

Grayscale’s GBTC shares last traded at $34.15, representing an 8.8% discount on Bitcoin’s market price. The discount has decreased from over 15% at the beginning of the month due to the unlocking of Grayscale’s Bitcoin shares bought in January and recent bullish momentum in Bitcoin. The premium for Ethereum Trust shares is negative at -9.6%.

Grayscale has applied for ETF approval for its shares with the Securities and Exchange Commission. It recently enlisted the support of BNY Mellon to act as its asset servicing provider. If granted an ETF, the discounts are likely to dissolve with the elimination of the lock-in period and reduction in management fees.

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