Grayscale considers possible tax consequences for spot Bitcoin exchange-traded funds.

Grayscale is assessing the potential tax implications related to spot Bitcoin (BTC) exchange-traded funds (ETFs), in light of erroneous reports regarding negative tax effects.

In a series of updates on X (formerly Twitter), Grayscale clarified that retail investors in the Grayscale Bitcoin Trust (GBTC) are not anticipated to face tax consequences when the fund liquidates Bitcoin to raise cash for share redemptions.

Grayscale noted that this is because the GBTC is organized as a grantor trust, meaning the entity that creates the trust is considered the owner of the assets and property for income and estate tax purposes.

“Cash redemptions of grantor trusts are not taxable events for non-redeeming shareholders like retail investors,” the post indicated, while outlining its distinction from mutual funds:

“Unlike mutual funds and many other ETFs, nearly all spot commodity ETFs (e.g., gold) are structured as grantor trusts for tax purposes. We assert that GBTC is appropriately classified as a grantor trust.”

Related: Brazil signs overseas crypto tax bill into law

This comes after recent reports suggesting that the United States Securities and Exchange Commission (SEC) conducted another meeting with Grayscale to further evaluate its spot Bitcoin ETF application.

On December 8, Cointelegraph reported that Grayscale and Franklin Templeton met with the SEC to discuss their applications, just a day after representatives from Fidelity appeared before the SEC.

Additionally, just days prior, on December 5, the SEC delayed its decision on Grayscale’s spot Ethereum ETF until January 24, 2024.

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