Cold Hard… Digital Currency

IN A $500 MILLION DOLLAR move, Grayscale Investments LLC., has filed to list its Bitcoin ETF securities on the New York Stock Exchange (NYSE), according to the Securities and Exchange Commission. 

 

Since inception in 2013, Grayscale Investments LLC. shares have traded over-the-counter.  Shares in parent company Digital Currency Group, Inc. have been the only option for return-hungry investors eager to join the party.  As such, shares in DCG have enjoyed a steady premium to Bitcoin spot price, according to industry analyst Marketwatch. 

 

According to an SEC filing, shares will be made available via direct sale by the Trust.  Each share recipient must be a registered Broker-Dealer and have an exclusive Participant Agreement with the sponsor.  Prospective Authorized Participants include KCG Americas LLC., and Wedbush Securities, who are currently in talks.  Custodial management of BIT Bitcoins, is assigned to Xapo Inc., a bitcoin wallet, while Bank of New York Mellon will act as transfer agent for the fund shares. 

 

The fund prospectus cites a laundry list of risk factors as contributing to a high degree of uncertainty associated with bitcoin investing.  Documents cite risks to the further development of digital currencies, including Bitcoin reliance on continued adoption in the world economy.  Changes in consumer buying habits, management of technological innovation, regulation, and public perception round off the list.

 

Despite the number of risks, the Trust’s assets were valued at $102,639,992, at the end of September, while the Trust’s bitcoin assets totaled $102,767,265.  Per-share price was $57.01.  Success is due in part to institutional investors favoring the conservative approach of funds with exclusive focus on Bitcoin – such as Grayscale Investments LLC.

 

The SEC is currently reviewing approval of two Bitcoin ETFs – If approved, they will be the first Bitcoin-exclusive ETF’s in the United States.  Market analysts anticipate growing adoption, with BIT being the catalyst for a speculative rush similar to that of gold ETF’s in the early 2000’s.

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