Starting in October 2022, Grayscale Investments, LLC’s (“Grayscale” or “Firm”) affiliated broker-dealer (“broker-dealer”) will take on some but not all of the responsibilities that were historically handled by Genesis Global Trading. This is the culmination of a long process. The affiliated broker-dealer has been SEC-registered and a member of FINRA since November 2021.
While this is an exciting achievement for our team and provides benefits in terms of efficiency and administration, it does not in itself represent a fundamental shift in our business. Here are some answers to common questions we’ve received so far:
What's the role of a broker-dealer for Grayscale?
In addition to managing our family of investment products, Grayscale is constantly developing new content to help educate investors about the merits of digital asset investing. Over time, we have built a team capable of serving as an authorized participant for our products and providing even more robust marketing and compliance functions. Having a dedicated broker-dealer makes it more straightforward to follow this path, all while continuing to respect existing rules and regulations for financial products.
How does this change Grayscale’s relationship with Genesis?
As many investors know, Grayscale has had a longstanding and positive working relationship with Genesis Global Trading, an affiliate company of Grayscale that is also under common ownership by Digital Currency Group. Although Genesis will no longer act as the authorized participant on Grayscale products, they will continue to be a liquidity provider for Grayscale. This allows our team to operate more autonomously and continue to create more efficiencies within the Grayscale business.
What is a liquidity provider?
When new investment comes into a given Grayscale product, our team is responsible for ensuring that that investment is fulfilled, by sourcing and selling tokens and securities. Working with a liquidity provider like Genesis enables us to tap into various digital asset or protocol markets to ensure that investments are fulfilled in a timely manner.
How does this support Grayscale’s future plans?
We’re not ready to share additional specifics, but our goal is to streamline, modernize, and enhance clients’ investment experience. We will continue to responsibly grow and scale against the backdrop of the rapidly evolving digital economy. This is just the beginning.