In yet another sign that bitcoin providers are eager to turn the digital currency into a proper investment vehicle, Grayscale Investments, a unit of Barry Silbert’s Digital Currency Group, today filed with the Securities and Exchange Commission to list its Bitcoin Investment Trust as an exchange-traded fund in a $500 million initial public offering.
According to a filed paperwork, the new ETF product will retain its existing name and will list on the New York Stock Exchange under the ticker symbol GBTC, subject to regulatory approval.
The move comes on the heels of the SEC’s decision to push back the date to approve the Winklevoss twins’ request to list a bitcoin ETF on the BATS exchange under the ticker COIN.
The Bitcoin Investment Trust (GBTC), which first launched in 2013 and presently trades over the counter at OTCQX, is still the only U.S.-based exchange-listed product that tracks the underlying price of bitcoin. Although the fund has been trading since March of 2015 as a Bitcoin-tracking ETF, it is not regulated by the SEC and does not actually track the price of bitcoin well in the market.
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Specifically, GBTC trades at a significant premium to Bitcoin itself. Shares of the trust currently trades at a 30% price premium over bitcoin, which means that investors pay this additional percentage over the bitcoin’s market price to gain exposure to the cryptocurrency through an institutionally managed investment vehicle.
If all goes according to plan, Grayscale Investments, LLC will be the sponsor of the Trust, with Delaware to act as its trustee. In addition, the Bank of New York Mellon will serve as the administrator and transfer agent for shares of the fund whilst Xapo Inc. will serve as custodian of the trust’s bitcoins.
The Bitcoin ETF Race
Despite investor interest, it seems unlikely that the SEC would be comfortable using the bitcoin as an underlying asset in a regulated investment vehicle any time soon. The Winklevoss Bitcoin Trust, owned by brothers Cameron and Tyler Winklevoss, filed the first bitcoin ETF application with the U.S. regulator four years ago, but no final decision was taken so far.
The commission said in October that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the exchange-traded product. The SEC’s decision closely mirrors what happened in September when it took a similar action regarding the application submitted by SolidX Partners, Inc., to launch an ETF that tracks the price of Bitcoin.
Section 19(b)(2) of the Securities Exchange Act of 1934 provides that the commission should approve or disapprove the proposed rule change within 45 days. However, the SEC can extend the period another 45 days, and after that another 90 days if it finds a longer period to be appropriate, in which case it should publish its reasons for doing so.