Giulio Prisco is a writer specialized in science, technology and business. He is persuaded that Bitcoin and its underlying technology are about to bring disruptive positive changes to finance, business, and society.
A few weeks agoBitcoin Magazinereportedthat the Bitcoin Investment Trust (BIT) was about to become the first publicly traded Bitcoin fund. On Thursday, the BIT received formalapprovalfor listing on theOTC Markets GroupsOTCQXexchange. The fund is listed with the symbolGBTC, and trading is expected to begin early next week.
Barry Silbertannouncedon Twitter that the BIT fund is live and waiting for eligible shareholders to deposit their shares and sell.
TheBITis the first product from Silberts newGrayscale Investments, a digital-asset management firm being launched concurrently by hisDigital Currency Group.The Wall Street Journalnotesthat the BIT is the latest addition to the growing number of bitcoin trading platforms that aim to expand bitcoin investments beyond the volatile spot exchanges and attract a new class of investors.
Each share of BIT is worth approximately one-tenth of a bitcoin. Holders of BIT shares wont hold bitcoin in their names, but they will hold shares of the fund, which itself holds bitcoin. Since the value of BIT shares will fluctuate with the exchange rate of bitcoin, the fund will be a convenient investment vehicle linked to bitcoin in particular, investors will be able to short the fund and profit from drops in the price of bitcoin. The availability of traded funds linked to bitcoin and investment vehicles such as options, futures and otherderivativesis expected to contribute to stabilizing the value of bitcoin.
The BIT skipped the lengthy SEC registration process by takinga shortcutapproved by the Financial Industry Regulatory Authority (FINRA). Without SEC registration, the BIT cant formally be considered as an Exchange Traded Fund (ETF), but other funds are seeking SEC approval for listing on the NYSE or Nasdaq. The Winklevoss twins are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to investors on NASDAQ with the ticker COIN.
The BIT will open bitcoin investing up to the wider world of capital markets and traditional investors who prefer not to trade bitcoin as currency because they are scared by bitcoins wild price swings.
Over the past three or four months, a handful of banks have started to experiment, said Silbert. Some of them are experimenting around trading, some around using the blockchain for settlement, and some are interested in deploying capital as investors.
The Grayscale website notes that digital currencies are poised to radically transform our financial system, but it wont happen overnight.
At Grayscale, we believe investors deserve an established, trusted, and accountable partner that can help them navigate the gray areas of digital currency investing, the website says. Thats why we are building transparent, familiar investment products that facilitate access to this burgeoning asset class, and provide the springboard to invest in the new digital currency-powered internet of money.
The hope within the bitcoin community is that BIT and future publicly traded bitcoin investment vehicles will improve liquidity and thus help smooth out some of the price volatility that has plagued bitcoin in its early years,notesPandoDaily. The fact that BIT is also now a regulated entity should help calm the (justified) fears of many prospective bitcoin investors. A more stable bitcoin market is seen as being a necessary pre-condition for widespread adoption as a payment vehicle.