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Crypto

Jan 20, 2022

Why Stash has Chosen Grayscale for Crypto in Smart Portfolios

By Stash Team

The company is a leader in digital currency investing, allowing investors to purchase shares in Bitcoin and Ethereum Delaware statutory trusts.

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We want to take a moment to explain why Stash has chosen cryptocurrency products from Grayscale Investments for its Smart Portfolios*.

Grayscale is the world’s largest digital asset manager and a long-term leader in cryptocurrency investing. Not only does the company manage more than $44 billion in digital currency assets, it holds approximately 3.5% of all Bitcoin in circulation.** Founded in 2013, Grayscale offers more than a dozen funds that offer investors access to digital currency. 

Smart Portfolio will feature investments in: 

  • The Grayscale Bitcoin Trust (GBTC), which offers exposure to Bitcoin.
  • The Grayscale Ethereum Trust (ETHE), which offers exposure to Ethereum.

The marketplace for digital currency is large. And Stash’s investment committee has specifically selected Bitcoin and Ethereum for Smart Portfolio, since these assets have the longest histories and are the most mature and liquid cryptocurrencies.

A word about Delaware statutory trusts

Through Smart Portfolio, you’ll be purchasing shares of something called a Delaware statutory trust (DST).  DSTs are regulated investment companies, with structures similar to mutual funds or ETFs.  The trust pools investor cash and streamlines the investment process. It will give you exposure to cryptocurrency while outsourcing the responsibility of trading, storing, or safeguarding individual coins or tokens. Unlike ETFs, these DSTs are not traded on major stock exchanges. However, they trade hundreds of millions of dollars a day on the over-the-counter (OTC) market, which is a market for securities that don’t meet certain price per share or market capitalization requirements.

A special note: Grayscale has filed paperwork with the Securities and Exchange Commission (SEC) to convert Grayscale Bitcoin Trust (GBTC) into an ETF. Pending the approval process, shares of the DST would automatically convert into shares of the ETF. 

If you want to learn more about cryptocurrency as an asset, you can find out more here

Risks of crypto and Delaware statutory trusts

Putting money into the market involves risk, and you can always lose money when you invest. Cryptocurrency is a particularly volatile asset, meaning it is subject to short-term price swings (up and down) that are generally much more dramatic than what stocks and bonds experience. 

Additionally, due to the uniqueness of the DST structure, the value of the shares of GBTC and ETHE may change at a different rate than the price changes in Bitcoin and Ethereum. That doesn’t mean that the value of the actual coins inside the trusts does not track the price of the currencies. 

These funds have higher expense ratios than most ETFs, and those costs are embedded in the price of the security when it is bought or sold.  Stash does not charge additional trading fees for these securities, and only charges a monthly subscription fee. 

Good to know: Thanks to its unique characteristics, digital currency exhibits low, or negative correlation, to traditional asset classes including those already held in Smart Portfolio. This means that they don’t typically move in the same direction as the other assets, and when added in small amounts to the diversified portfolio may actually work to decrease overall volatility. 

*As of 9/1/21

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Written by

Stash Team

Crypto is relatively new and can be volatile. Investments are Delaware statutory trusts and offer indirect exposure to Crypto.

A “Smart Portfolio” is a Discretionary Managed account whereby Stash has full authority to manage.

Stash offers three plans, starting at just $1/month. For more information on each plan, visit our pricing page.

 

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