Michael Sonnenshein has stepped down from his role as the CEO of Grayscale Investments LLC.

Sonnenshein will be replaced by former Goldman Sachs executive Peter Mintzberg as of Aug. 15. Until then, Grayscale’s chief financial officer, Edward McGee, will lead the firm in the interim as the principal executive officer.

Barry Silbert, founder and CEO of Digital Currency Group — the parent company of Grayscale — wrote in a May 20 X post:

“As we position Grayscale for its next phase of growth, excited to welcome Peter Mintzberg as Grayscale’s CEO, effective August 15. Joining from Goldman Sachs, Peter has 20+ years of experience across prominent asset managers, including BlackRock, OppenheimerFunds & Invesco.”

Founded in 2013, Grayscale is among the world’s most prominent cryptocurrency asset management firms, with over $50 billion worth of assets under management as of September 2021.

During his 10 years as CEO, Sonnenshein played a pivotal role in the launch of the first United States spot Bitcoin exchange-traded funds (ETFs), according to Silbert, who wrote:

“Michael guided the firm through exponential growth & oversaw its pivotal role in bringing spot bitcoin ETFs to market, leading the way for the broader financial industry. We wish him the best in his future endeavors.”

Grayscale was among the first spot Bitcoin ETF issuers in the United States. Its Grayscale Bitcoin Trust (GBTC) was converted into an ETF on Jan. 11, though the fund had previously been operating since 2013. This made it the first publicly traded Bitcoin fund, according to Grayscale.

Grayscale’s GBTC is the largest ETF by on-chain Bitcoin investments, currently holding over 287,801 BTC, worth $19.3 billion, and holding a 34.9% market share. However, Grayscale also requires investors to pay the highest fee — 1.5%, compared to the industry standard of 0.20% to 0.25%.

In comparison, BlackRock’s iShares ETF is the second-largest, holding over 274,000 BTC, worth $18.4 billion, and having a 33.3% market share, according to Dune.

Despite promising to bring more baby boomers into Bitcoin, spot Bitcoin ETFs could cannibalize on-chain liquidity, according to Jim Bianco, founder of macro research firm Bianco Research. Bianco wrote in a May 19 X post:

“Pulling money off-chain into the Tradfi world in the form of an orange FOMO poker chip will not get digital assets to the promised land of a new decentralized financial system. If anything, it is getting in the way of this goal.”

If ETFs continue siphoning on-chain liquidity back into the world of traditional finance (TradFi), this could challenge Bitcoin’s narrative as a decentralized alternative to the legacy fiscal system, according to Bianco:

“If the goal is to develop a new financial system, an ETF dragging money back into the Tradfi world is not getting to that promised land.”

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