The Wall Street Journal reports that Barry Silbert’s Bitcoin Investment Trust (BIT) is about to become the first publicly traded Bitcoin fund. The BIT will be an interesting option for traditional investors looking for exposure to Bitcoin who prefer not to trade Bitcoin as currency. The BIT is sponsored by Grayscale Investments, a part of Silbert’s Digital Currency Group.
Currently, the BIT, launched in 2013, is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables accredited investors, with annual incomes greater than $200,000 or assets of more than $1 million, to gain exposure to the price movement of bitcoin for a minimum investment of $25,000 without the challenges of buying and securely storing bitcoin. BIT-accredited investors are shielded from hacking attacks and unregulated entities, which would be appealing for small investors as well. But the BIT hasn’t been publicly available to small investors so far.
The Winklevoss twins also are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to all investors on NASDAQ with the ticker COIN. The launch date is unknown, but Cameron and Tyler Winklevoss say that everything is proceeding according to plan. According to their Securities and Exchange Commission (SEC) filing, the value of COIN shares will reflect the dollar exchange rate of Bitcoin on Winkdex.
The Winklevoss ETF is still going through the lengthy ETF registration process with the SEC. But BIT is taking a shortcut, permitted by a rule that that allows holders of a private fund to sell their shares publicly after a 12-month lockup period and completing a less arduous approval process with the Financial Industry Regulatory Authority (FINRA). Without SEC registration, the BIT can’t formally be considered as an ETF, but once existing shares are offered publicly it will be equivalent to an ETF in practice.
Silbert said that FINRA granted BIT’s request for a permanent ticker symbol, GBTC, which “is expected to be effective shortly.”
In a statement, the Digital Currency Group said, “Although we have been assigned a ticker symbol, no assurances can be given as to when or if such trading will commence, or that an active public secondary market for BIT shares will develop or be maintained.”
Each share of BIT is worth approximately one-tenth of a bitcoin. As of Friday, the trust’s net asset value stood at $24.43 per share. The Wall Street Journal article notes that many investors purchased their BIT shares in 2013 when the dollar exchange rate of bitcoin was about $100, so they would make a profit selling now. New investors, including small investors, will be able to buy BIT shares soon.
Bitcoin space and the traditional stock market are increasingly converging, and the Bitcoin economy as a whole will continue to have DiY and “underground” aspects. But it is evident that regulated, professional Bitcoin services will become more common, and take Bitcoin closer to mainstream.
March 02, 2015 at 05:28PM
