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Fortune
Fortune
Niamh Rowe

Goldman Sachs head of strategy Mintzberg to replace Sonnenshein as Grayscale CEO

(Credit: Ting Shen—Bloomberg/Getty Images)

The chief executive officer of the world’s largest cryptocurrency asset manager is stepping down. After 10 years at Grayscale, Michael Sonnenshein will be replaced by Peter Mintzberg, global head of strategy for asset and wealth management at Goldman Sachs, according to a statement issued Monday morning.

Mintzberg has a two-decades-long career on Wall Street, with prior roles at the now-competing spot Bitcoin exchange-traded funds Invesco and BlackRock, in addition to Oppenheimer Funds. He will also join Grayscale’s board.

Sonnenshein is set to be replaced on Aug. 15, according to an X post by Barry Silbert, CEO and founder of Digital Currency Group, Grayscale’s parent company. The change aligns with Silbert positioning Grayscale for its “next phase of growth.”

“I want to thank Sonnenshein—during his 10 years at Grayscale, Michael guided the firm through exponential growth and oversaw its pivotal role in bringing spot bitcoin ETFs to market, leading the way for the broader financial industry,” Silbert wrote. Sonnenshein replaced Silbert as CEO in 2021, and while at the helm, he guided Grayscale from $60 million in assets under management to approximately $30 billion, according to the company's statement.

'Trying to shake it up'

But the asset manager is changing hands at a difficult moment in its history. Since the Grayscale Bitcoin Trust (GBTC) converted into an ETF in January, it has seen outflows of over $17 billion. By contrast, the nine competing Bitcoin funds have seen inflows of over $30 billion.

“The outflows are really big, so they're probably just trying to shake it up," Eric Balchunas, Bloomberg’s senior ETF analyst, told Fortune. "A big reason for the tough waters they are sailing in is because the fee is high, right? I don't know who chose that, and whether Michael is just the fall guy, or it was his idea."

Starting in 2013 as a closed-end trust fund, GBTC was the only real option to trade Bitcoin on the stock market, for which investors paid a premium. But since February 2021, it traded at a deep discount, hitting record lows of almost 50% in December 2022. Investors had been locked into the trust, while they watched GBTC’s discount on the underlying asset, Bitcoin, widen.

So Grayscale fought the Securities and Exchange Commission in a lengthy legal battle for the right to turn the fund into an ETF, and thus largely can be credited with the approval of the products in January. But by fighting the law, the issuer arguably became the architect of its own demise.

That’s because by freeing up investors to redeem their shares, it unleashed staggering outflows, as GBTC’s maintenance fee of 1.5% vastly exceed those of competitors charging 0.25% or less. VanEck even announced in March it would be temporarily cutting fees to 0%. Capital gains taxes are the predominant reason current many GBTC shareholders have refrained from withdrawals.

However, the GBTC bleed has shown signs of petering out since peaking on March 18, when the fund saw $618 million leave in a single day, according to CoinGlass data. Moreover, recently it has even reported inflows on five days in May—three of which were last week.

“Ironically, they have actually started to turn it around, so that's also part of why I was a little surprised” by the announcement, adds Balchunas. But where are those new inflows coming from, considering the comparatively higher fees? Balchunas admits he isn’t sure. He estimates it's a product of Grayscale’s wide-reaching advertising campaign reaching new potential investors.

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