Grayscale IPO: Lower Fees, Lower Revenue, and a High-Stakes Shift in Crypto Asset Management

Introduction

Grayscale has filed an S-1 with the SEC to list its Class A common stock on the New York Stock Exchange under the ticker GRAY, marking a major strategic shift from a private crypto asset manager to a publicly traded company. The firm currently manages about $35 billion across more than 40 crypto investment products, including spot Bitcoin and Ethereum ETFs. As a public company, Grayscale will face greater disclosure requirements and shareholder scrutiny, particularly around management fees, product strategy, and competitive positioning in the crypto ETF market.

The IPO filing reveals revenue pressure despite still-strong profitability. Grayscale reported $318.7 million in revenue for the nine months ended Sept. 30, 2025, down from $397.9 million in the same period of 2024, with net income slipping to $203.3 million from $223.7 million. Its weighted-average management fee fell from 1.67% to 1.39% year-over-year as low-cost spot Bitcoin ETF rivals from BlackRock and Fidelity intensified fee competition. Assets under management also edged down from $31.8 billion to $30.6 billion. The S-1 highlights that lower fees, outflows, and distributions have weighed on full-year 2024 results, reinforcing the need for a strategic reset via the IPO.

The offering uses a dual-class share structure that preserves control for parent company Digital Currency Group (DCG), which will hold super-voting Class B shares with 10 votes each versus one vote per Class A share, keeping about 70% of total voting power. Importantly for crypto investors, the IPO does not change the legal structure, custody, or operations of existing Grayscale trusts and ETFs such as GBTC and ETHE. Fund assets remain with third-party custodians, while IPO proceeds will go to buying interests from existing owners, not into the funds themselves. However, the listing will give Bitcoin ETF and Ethereum ETF holders more transparency into Grayscale’s financial health and fee strategy, with public shareholders adding another layer of pressure as the firm competes in the crowded crypto ETF and digital asset management space.

Background

Grayscale Investments, one of the largest crypto asset managers, has taken a major step toward the public markets by filing an S‑1 with the U.S. Securities and Exchange Commission (SEC) to list Class A common stock on the New York Stock Exchange under the ticker GRAY. The firm manages roughly $35 billion in assets under management (AUM) across more than 40 products, including its flagship Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE), now operating as spot ETFs following U.S. approvals. For a DeFi and fintech audience, this IPO is more than a corporate milestone—it’s a signal of how crypto ETFs, digital asset management, and tokenized finance are maturing into a more traditional capital markets framework.

At a high level, the IPO comes amid revenue and fee pressure. According to Grayscale’s S‑1 and reporting from outlets like CryptoSlate and Reuters, the company generated $318.7 million in revenue for the nine months ended Sept. 30, 2025, down from $397.9 million in the same period of 2024, with net income slipping from $223.7 million to $203.3 million over that span. CryptoSlate and Reuters both highlight that average AUM fell modestly to about $30.6 billion and that Grayscale’s weighted-average management fee declined from around 1.67% to 1.39% as competition from lower-fee spot Bitcoin ETFs—particularly products from BlackRock and Fidelity—intensified. CoinDesk notes that Grayscale is part of a broader wave of crypto-native companies, such as Circle and Bullish, moving into U.S. public markets. In this context, the GRAY IPO doubles as a strategic pivot: tighter economics, more disclosure, and a clearer push to compete as a full-scale crypto asset manager in a crowded Bitcoin ETF and Ethereum ETF landscape.

Structurally, the offering features a dual-class share model that preserves control for Grayscale’s parent, Digital Currency Group (DCG). DCG will hold Class B shares with 10 votes per share, versus one vote for each Class A share, resulting in roughly 70% of total voting power even after the IPO. Class B shares carry voting rights but no economic rights, while Class A shares participate economically with standard one-share/one-vote governance. This makes Grayscale a “controlled company” under NYSE rules, exempt from certain corporate governance requirements, though those super-voting rights fall away if DCG’s stake drops below 20%. For DeFi and fintech builders, this is a familiar pattern: crypto-native firms adopting Big Tech–style dual-class structures to retain founder and sponsor control while tapping public capital.

Financial Performance, Fee Compression, and ETF Competition

From a fundamentals standpoint, Grayscale’s numbers tell the story of a business that is still highly profitable but facing margin compression and structural competition in the crypto ETF market. For the nine months ended Sept. 30, 2025:

• Revenue:

  • 2025: $318.7 million

  • 2024: $397.9 million

• Net income:

  • 2025: $203.3 million

  • 2024: $223.7 million

• Average AUM:

  • 2025: $30.6 billion

  • 2024: $31.8 billion

These figures, consistent across SEC filings and coverage from CryptoSlate, Reuters, and CoinDesk, show a ~20% revenue drop despite relatively stable AUM. The key driver is fee compression: the weighted-average management fee fell from about 1.67% to 1.39% as Grayscale cut expenses and reacted to aggressive pricing from BlackRock’s and Fidelity’s spot Bitcoin ETFs and other low-cost crypto ETFs.

For a DeFi/fintech audience, this is the traditional passive management playbook playing out in crypto:

• When low-cost ETFs arrive in a maturing asset class, early high-fee incumbents are pressured to:

  • Reduce fees (which directly reduces revenue on the same AUM).

  • Differentiate via product design (e.g., multi-asset crypto ETFs, thematic baskets, staking-integrated products where allowed).

  • Explore new monetization channels (research, data, or broader tokenization products).

Grayscale’s operating margin, still north of 65%, shows that the business remains highly cash-generative even under pressure, but the direction of travel is clear: fees are converging downward. For institutional allocators and DeFi-native treasuries looking at Bitcoin ETF or Ethereum ETF exposure, the GRAY IPO underscores that fee levels are likely to remain competitive—and that sponsors now answer not just to regulators and clients, but also to public equity investors who care about scale, efficiency, and diversification.

Dual-Class Structure, Governance, and DCG’s Control

The IPO’s dual-class share structure is central to understanding Grayscale’s governance and long-term strategy:

• Class A (GRAY):

  • Listed on the NYSE.

  • One vote per share.

  • Full economic rights (dividends, residual claims if any).

• Class B (held by DCG):

  • Ten votes per share.

  • No economic rights.

  • Expected to result in ~70% voting control post-IPO.

This structure classifies Grayscale as a “controlled company” under NYSE rules, which typically allows exemptions from certain requirements such as fully independent boards or committees. However, the S‑1 notes that super-voting rights sunset if DCG’s ownership falls below a specified threshold (around 20% of total shares outstanding).

For DeFi and fintech professionals, this echoes a common tension: centralized governance vs. market participation. While many DeFi protocols experiment with on-chain governance and token-based voting, Grayscale’s approach mirrors that of many tech and fintech IPOs: keep strategic control centralized in the sponsor while still enabling market price discovery and capital formation. The trade-off is reduced shareholder influence in exchange for what management argues is long-term strategic continuity—especially important in a regulatory environment that can shift quickly for crypto ETFs and digital asset managers.

Impact on GBTC, ETHE, and Other Crypto ETF Holders

A key practical question for market participants is: what does the GRAY IPO change for GBTC, ETHE, and other Grayscale products?

According to the S‑1 and coverage from CryptoSlate:

• The IPO does not change:

  • The legal structure of Grayscale’s existing trusts and ETFs.

  • Custody arrangements (assets remain with third-party custodians under trust agreements).

  • Day-to-day fund operations, such as portfolio management and creation/redemption mechanisms.

• The IPO proceeds are primarily used to:

  • Purchase membership interests from existing owners in Grayscale Operating.

  • This means the transaction converts private ownership into publicly tradable equity, rather than injecting fresh capital into the funds themselves.

• Grayscale is offering a directed share program:

  • A portion of IPO shares is reserved for eligible investors in GBTC and ETHE, who held shares as of Oct. 28 and pre-register by Nov. 24.

  • This allows existing trust/ETF investors to participate in GRAY’s initial allocation, but it does not guarantee an allocation and carries no lock-up on shares purchased.

For crypto ETF holders, the most tangible change may be greater transparency rather than product restructuring. As a public company, Grayscale will file:

• Quarterly (10‑Q) and annual (10‑K) reports, detailing:

  • Revenue, margins, and product-level concentration.

  • Legal and regulatory risks (e.g., litigation, enforcement actions, or policy shifts around crypto ETFs).

  • Strategic priorities across new products, markets, and potential tokenization initiatives.

This additional disclosure can help sophisticated DeFi treasuries, crypto-native hedge funds, and fintech platforms that integrate crypto ETFs to better evaluate sponsor risk—especially for strategies that layer leverage, structured products, or on-chain wrappers on top of Grayscale vehicles.

Where This Fits in the Broader Crypto Capital Markets Shift

Grayscale’s IPO is part of a broader trend: crypto-native firms becoming public-market infrastructure. As CoinDesk and CryptoBreaking note, 2025 has seen multiple crypto firms—such as Circle and Bullish—pursue U.S. listings. A few key implications for a DeFi/fintech audience:

• Institutionalization of Crypto Exposure

   Public listings of crypto exchanges, stablecoin issuers, and crypto asset managers legitimize digital assets as part of institutional portfolios. They enable:

• Equity-based exposure to the crypto infrastructure layer instead of (or alongside) direct token holdings.

• Blended strategies where investors hold Bitcoin ETFs, Ethereum ETFs, and crypto infrastructure equities like GRAY, Coinbase, or mining companies.

• Convergence of TradFi and DeFi 

  As more crypto companies go public, the boundary between TradFi, CeFi, and DeFi continues to blur. For example:

• A traditional bank or fintech app can offer:

  • Direct access to spot Bitcoin ETF products (including Grayscale’s).

  • Tokenized exposure or synthetic returns on these products via on-chain derivatives, yield strategies, or structured vaults in DeFi.

• DeFi protocols can plug in publicly traded sponsors’ data (e.g., fee schedules, AUM, risk disclosures) as parameters in on-chain governance decisions or risk models.

• Regulatory Signaling 

  SEC acceptance of an S‑1 for a major crypto asset manager—while not an endorsement of any product—signals a level of comfort with bringing crypto business models into the standard public-company regime. Combined with:

• The spot Bitcoin ETF approvals in 2024,

• Progress around Ethereum ETFs, and

• Growing work on tokenized real-world assets (RWAs), the GRAY IPO is another data point that regulated, listed crypto exposure is now a core part of the financial system.

Why This Matters to DeFi and Fintech Builders

For DeFi protocols, fintech platforms, and institutional users, the Grayscale IPO has several practical and strategic implications:

• Competitive Pressure on Fees Helps Users

   The drop in Grayscale’s management fees is a direct consequence of competition. As new entrants undercut legacy pricing:

• End users get cheaper Bitcoin ETF and Ethereum ETF exposure.

• On-chain products that wrap or reference these ETFs can pass along better economics.

• More Transparent Sponsor Risk 

  With GRAY as a public equity, market participants get a real-time read on:

• How resilient Grayscale’s business model is under regulatory shocks, fee wars, or market drawdowns.

• How concentrated revenue is in Bitcoin versus other assets or new product lines 

That data can be used in everything from collateral risk frameworks to treasury allocation decisions in DAOs.

• Potential Expansion into Tokenization and Multi-Asset Strategies 

  While the S‑1 centers on ETF and trust products, Grayscale has signaled interest—like many asset managers—in tokenization of traditional asset classes (real estate, private credit, and more). If Grayscale moves further into tokenized assets:

  
  

  • Expect to see more bridges between off-chain custody/trust structures and on-chain representations (e.g., tokenized fund shares or synthetic exposures).

  • DeFi protocols could integrate these as new forms of collateral, liquidity, or yield-bearing assets, subject to jurisdictional constraints.

• Governance and Control Remain Centralized 

  The dual-class structure is a reminder that, unlike permissionless DeFi protocols, major crypto ETFs and asset managers remain centralized governance entities. For some DeFi and Web3 participants, this is a feature (clear accountability, stable decision-making); for others, it’s a limitation compared to transparent, on-chain, token-based governance.

Key Takeaways

For a DeFi and fintech-focused audience, Grayscale’s IPO filing and the forthcoming GRAY listing highlight several important trends:

• Grayscale IPO & GRAY Stock: A major crypto asset manager is stepping into the public equity markets, formalizing its role as a bridge between Bitcoin ETFs, Ethereum ETFs, and traditional capital markets.

• Revenue Dip & Fee Compression: Revenue is down roughly 20% year-over-year, largely due to lower management fees and competitive outflows, but margins remain robust.

• Dual-Class Shares & DCG Control: Digital Currency Group will retain ~70% voting control through super-voting Class B shares, mirroring governance structures used by many large tech and fintech IPOs.

• Limited Direct Impact on ETF Holders: The IPO doesn’t change the legal or operational structure of GBTC, ETHE, or other Grayscale products, but it will increase financial transparency and market scrutiny over fee levels and strategy.

• Signal of Market Maturity: Alongside other crypto firms going public, GRAY underscores the ongoing institutionalization of crypto, and the convergence between TradFi, CeFi, and DeFi.

For DeFi builders, fintech operators, and institutional allocators, the bottom line is clear: crypto asset management is now playing by public-market rules, and the resulting transparency, competition, and governance structures will shape how on-chain and off-chain financial systems interact in the coming years.