Grantor Trust
A passive legal trust that holds one asset and issues shares, with tax treated as though holders owned a slice of the asset directly.
In a grantor trust the sponsor arranges the vehicle, a trustee holds legal title, and a custodian keeps the asset, while the trust itself does nothing but hold. Most United States spot digital-asset products use this structure because a single-asset vehicle cannot meet the diversification requirements of a registered fund, which means there is no fund board, no Investment Company Act custody rule, and no statutory limits on affiliated transactions. Expenses are typically paid by selling small amounts of the held asset, so the quantity of the asset backing each share declines gradually even when nothing else changes. Holders receive tax reporting that treats them as owning a proportional interest in the underlying property rather than shares in a corporation.
In der Praxis
A commodity grantor trust files a Form S-1 registration statement and appoints a sponsor, a trustee, a custodian, and a marketing agent, each named in the prospectus.
Das häufige Missverständnis
That a trust structure carries the same protections as a registered mutual fund, when grantor trusts sit outside the Investment Company Act and lack its board oversight and custody requirements.