Late last week, Grayscale Investment's Bitcoin Investment Trust, managed by Barry Silbert, filed its form S-1 with the US Securities And Exchange Commission (SEC) to issue up to $500 million USD worth of shares to be traded on listed exchanges. The Bitcoin Investment Trust already trades on over the counter (OTC) markets, under the ticker OTCQX:GBTC since late 2013. This filing would allow it to become regulated as an exchange traded fund (ETF), giving it legitimacy and allowing professional and other investors to gain access to bitcoin, who are restricted from owning OTC shares. Still, SEC approval is anything from certain at this point. (See also: Blockchain Company Files for New Bitcoin ETF)

Bitcoin ETFs

Bitcoin, the world's largest decentralized, digital currency, has risen in value markedly over the past few years, from around $200 to just under $1,000 per Bitcoin. Obtaining Bitcoin, however, is not entirely easy for the average investor. Bitcoin can be obtained via a resource-intensive "mining" operation, or by purchasing them online via a number of cryptocurrency exchanges. These exchanges are located in various parts of the world, most notably in China, where regulation is thin and investors are not protected from fraud or mishandling of funds. A regulated ETF where investors could indirectly own bitcoin via a professionally managed investment fund taking on the risk of obtaining and keeping bitcoin is therefore in high demand. (For more, see: Bitcoin ETFs: How Do They Work?)

Famously, the Winkelvoss twins tried to launch a Bitcoin ETF in 2013. According to ZeroHedge, "Winklevoss Capital Management LLC, launched the first proposed bitcoin ETF, the Winklevoss Investment Trust, looking to trade on the HFT-dominated BATS exchange. The SEC is expected to make a decision on it by March. A second group, SolidX Partners followed last July seeking SEC approval for its bitcoin ETF, SolidX Bitcoin Trust, which also would be listed on the NYSE." Over the past three years, the SEC has failed to grant approval to any of these ventures. (For more, see: Why The Winklevoss Twins' New Bitcoin ETF Matters)

According to Bitcoinist.com, "analysts suggested the SEC was unlikely to grant the Fund approval due to various factors causing unease – including, somewhat unusually, “fear, uncertainty, and doubt.”" Still, Grayscale's regulatory filing is a hopeful sign, with a company press release stating: “Grayscale Investments, LLC announced today that it has filed a registration statement on Form S-1 relating to the proposed registration of the Bitcoin Investment Trust’s shares (the “registered Shares”) with the Securities and Exchange Commission,”

Currently the over-the-counter shares of Grayscale's fund, GBTC is trading at around a 20% premium to the price of Bitcoin available via online exchanges.

 

 

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