The Bitcoin industry achieved a major milestone. Barry Silbert’s Bitcoin Investment Trust (BIT) has been approved to be publicly traded on the over-the-counter (OTC) markets.
BIT has been temporarily assigned the ticker symbol BTCV on the OTC Markets “pink sheet” site but has been approved to use GBTC as their permanent ticker.
Units of the fund, when originally launched, represented one tenth of a bitcoin (accounting for the annual management fee of 2%, units now represent roughly 0.97 BTC). Thus, it is the first publicly traded bitcoin investment vehicle, beating the Winklevoss twins’ proposed bitcoin exchange traded fund (ETF) to the finish line. Their Winklevoss Bitcoin Trust was first registered with the Securities and Exchange Commission (SEC) last year, but has yet to be approved.
BIT, however, took the backdoor approach. In opting to list with OTC Markets Group and gain approval with the Financial Industry Regulatory Authority (FINRA), BIT underwent a far less intensive process than mandated by the SEC. BIT leveraged a rule allowing holders of a private fund to sell shares publicly following a 12-month lockup period–it was roughly one year ago when Silbert started the process.
OTC-listed shares are subject to fewer information disclosure requirements, hence making them occasionally risky bets. BIT said that it is also working through the approval process to have shares quoted under the Alternative Reporting Standards on OTCQX, which holds issuers to higher standards than pink sheets listings.
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BIT had, until now, been limited to accredited investors with at least $200,000 in annual income or $1 million in assets. The public listing will potentially open it up to any type of investor.
In is uncertain, however, how much of a secondary market will exist for the shares. New shares are generated whenever Grayscale Investments, which sponsors BIT, purchases new bitcoins. Merriman Capital will function as the fund’s exclusive market maker for 30 days and will supply price quotes. In a statement, Slibert’s 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.”
Observers have expressed hope that such an offering is what bitcoin needs to bring stability to its prices. However, it can be equally argued that bitcoin prices will remain volatile so long as uncertainty prevails as to bitcoin’s fundamental underlying value.
Bitcoin prices have reacted positively to the news, jumping by more than 8% to as high as $258 on BTC-e, challenging 2-week highs. After jumping by 10% heading into last weekend, prices had begun to drift lower, giving up more than half their gains before the news broke.
Late last week, it was also announced that TeraExchange LLC will be going public through a reverse merger with MGT Capital Investments Inc. Tera’s bitcoin derivative platform was previously approved by the US Commodity Futures Trading Commission (CFTC), though the contracts traded on it are still pending approval.