Digital Currency Group is the parent of both Genesis Global Holdco and Grayscale Investments, sponsor of Grayscale Bitcoin Trust. ARK, which was founded in 2014, in 2015 gained its first exposure to bitcoin through the trust, said Yassine Elmandjra, blockchain/cryptoasset analyst at ARK.
"We were the first public fund manager to do so, and this was at a time when bitcoin was nowhere near as mature as it is today," Mr. Elmandjra said.
Today, "GBTC remains really the most liquid product that trades over the counter and that allows for our ETFs and separately managed accounts to gain exposure to bitcoin's price behavior," he said referring to the trust by its ticker symbol.
"So that I'd say is the primary reason why we have exposure to Grayscale," Mr. Elmandjra said, adding that GBTC's grantor trust structure makes ARK "comfortable with the way that our assets are custodied."
According to holdings data available via ARK's website as of Jan. 20, GBTC ranked as the ARK Next Generation Internet ETF's fourth-largest holding. The roughly $954 million fund held about 5.9 million shares of GBTC with a market value totaling about $68 million.
Still, Mr. Elmandjra emphasized that ARK's investment in GBTC is driven by the compelling opportunity bitcoin itself affords.
"To be honest, what we'd like is a (spot) bitcoin ETF … so we're not particularly wed to Grayscale as an entity," he said.
Grayscale is currently suing the Securities and Exchange Commission for denying an application pertaining to GBTC's proposed conversion into a spot bitcoin exchange-traded fund.
Given recent events, "a lot of fear" has been brewing lately, especially as GBTC shares' discount to net asset value has widened, Mr. Elmandjra said. ARK believes that GBTC "is still a largely misunderstood product and much of the fear is unwarranted," he added.