Barry Silbert’s Bitcoin Investment Trust is poised to become the first publicly traded bitcoin fund, with approbation and assignment of a ticker symbol by the financial industry’s main self-regulatory body paving the way for trading on an electronic platform operated by OTC Markets Group .
The BIT, which was first launched in 2013 as a private fund for accredited investors with annual incomes more preponderant than $200,000 or assets of more than $1 million, has been racing against a rival offering by twins Cameron and Tyler Winklevoss, best kenned for their lawsuit against Facebook Inc. Chief Executive Mark Zuckerberg .
While the competing Winklevoss Bitcoin Trust is going through a lengthy Securities and Exchange Commission process to register a formal exchange-traded fund, the BIT has taken a backdoor route to public listing. By exploiting a rule that sanctions holders of a private fund to sell their quotas publicly after a 12-month lockup period and consummating a less arduous approbation process with the Financial Industry Regulatory Ascendancy, some of those long-held shares in BIT should anon be available to investors of any income or wealth bracket. The BIT is sponsored by Grayscale Investments, a unit of Mr. Silbert’s Digital Currency Group, which he established last year to hold the digital currency intrigues of his broker-dealer SecondMarket Inc.
The engenderment of a publicly traded bitcoin investment conveyance is optically discerned as a paramount milestone for the digital currency’s bid for mainstream acceptance. Bitcoin advocates hope that regulated instruments will embolden a wider investment base as investors will no longer need to own bitcoin directly, which can expose them to hacking peril. Those same enthusiasts hope that more liquid trading will avail smooth bitcoin’s notoriously volatile price and thus make the digital currency more appealing for online payments and value transfers.
Neither Tyler nor Cameron Winklevoss was immediately available for comment. In the past they have argued that their offering will be superior to the Digital Currency Group’s because investors will optate the full imprimatur of the SEC afore buying an ETF-like conveyance. Without SEC approbation, Mr. Silbert’s fund can’t be formally relegated as an ETF, but once subsisting shares are offered publicly it will function very much akin to one.
As of Sunday, BIT shares were being cited under the ephemeral ticker symbol BTCV on OTC Markets’ “pink sheets” site, which includes over-the-counter offerings from companies with circumscribed information disclosure. Price quotes are being supplied by Merriman Capital, which has been given a 30-day exclusive status to function as the fund’s initial market maker.
Mr. Silbert verbally expressed Finra granted its request for a perpetual ticker symbol, GBTC, and that “is expected to be efficacious shortly.” He verbally expressed Grayscale is additionally discretely “working through the approbation process to enable the BIT’s shares to be quoted under the Alternative Reporting Standards on OTCQX, the top rialto operated by OTC Markets Group.” That top-tier rialto holds issuers to significantly higher standards of disclosure than is required for its pink sheet listings.
It is obscure how much secondary trading there will be in the BIT’s publicly listed shares. Any incipient shares, which are engendered whenever Grayscale purchases bitcoins, can be sold only to affluent, accredited investors. The size of the secondary market float will depend on how many early investors capitalize on the expiry of the lockup period to sell.
In a verbal expression, the Digital Currency Group verbalized, “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.”
Many investors who purchased their portions at the BIT’s launch in the fall of 2013, when bitcoin’s price was around $100, have an incentive to sell. Even though bitcoin’s price is well down from its peak around $1,150 in early December of that year, at the current $247 price quoted by news site Coindesk, those early investors have a chance to realize a salubrious profit. The Digital Currency Group is additionally sanctioned to offer a constrained amount of its proprietary shares to the public, which would inspirit the development of the secondary market.
Each portion 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.