Article updated on October 1 at 11:44 BST.
Private investment vehicle the Bitcoin Investment Trust (BIT) will today (26th September) begin raising capital on SecondMarket, the alternative trading system for private company stock.
BIT, an open-ended private trust, invests exclusively in bitcoin and enables people to gain exposure to the digital currency without having to directly buy and store it.
Shares of BIT, which is the first US-based private investment vehicle to invest exclusively in bitcoin, are being offered exclusively on SecondMarket.
Initially, each BIT share will represent 0.1 bitcoins, but the trust will not generate any income and will regularly sell/distribute bitcoins to pay for on-going expenses, so the amount of bitcoin represented by each share will gradually decline over time.
Registered broker-dealer SecondMarket has made a $2m seed investment in BIT, and its wholly owned subsidiary Alternative Currency Asset Management (ACAM) is sponsoring the trust.
"We incubated the BIT to alleviate the problems of direct bitcoin ownership, including having to wire money to newly established and potentially unregulated entities around the world,” said SecondMarket founder and CEO Barry Silbert.
He went on to say he believes a bitcoin-related investment vehicle is a great fit for SecondMarket as his company's infrastructure "enables streamlined capital raising, liquidity, and investor communications for funds and companies".
Silbert said he thinks bitcoin has the potential to make an impact on a number of industries, but noted that digital currency could also encounter problems. He warned:
"Bitcoin … faces regulatory uncertainty and widespread adoption issues that make investing in bitcoin a highly risky endeavour."
Those who do choose to invest in BIT will have the opportunity to gain liquidity through auctions on SecondMarket, which will start next year. The Net Asset Value (NAV) of the BIT will be calculated daily.
Jon Matonis, executive director of the Bitcoin Foundation and member of ACAM's advisory board, said: "The bitcoin offering from SecondMarket is a project that has been in development for over a year now. It will set the standard for best practices of bitcoin as an asset class in the US."
SecondMarket has confirmed that Archibald Cox Jr, former chairman of Barclays America, has also joined the advisory board and invitations have been sent out to other individuals that are anticipated to accept and join over the coming weeks.
Mark Murphy, executive vice president of communications at SecondMarket, said the company had received a number of requests from financial professionals, technology entrepreneurs and even gold enthusiasts relating to investing in bitcoin, which cemented the company's decision to add BIT.
Murphy said BIT differs from the Tyler and Cameron Winklevoss' proposed Winklevoss Bitcoin Trust as it is aimed exclusively at institutional and accredited individual investors:
"We believe that the risk profile of bitcoin is not appropriate for retail investors.
We’re obviously excited about the potential upside of bitcoin, but there’s also the real possibility that the value of bitcoin will go down to zero."
The price of bitcoin is currently sitting at around $122-$126, but it has fluctuated between around $250 and $68 over the past six months. Some of those involved in the space believe the price could reach four-digit numbers by the end of the year or into 2014, but others still protest that digital currency is a passing fad.
Bitcoin Investment Trust is now being listed on the Bloomberg terminal with the trust's objective and strategy being noted as "currency", but the asset class as "specialty".
The minimum investment accepted is currently $25,000, with a front load of 0%, back load of 1.5% and management fee of 2%. The fund code is XBTFUND US, which adds weight to the argument that XBT should be adopted as the ISO currency code for bitcoin.
What do you think? Let us know in the comments below.
Disclaimer: CoinDesk founder Shakil Khan is an investor in SecondMarket.
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Bitcoin Investment Trust and Genesis Trading Settle With .
The SEC filed an administrative proceeding today regarding a Cease & Desist instituted against SecondMarket and Bitcoin Investment Trust (BIT). The entire affair relates back to an event in 2013, where BIT, a Delaware trust whose sole assets were bitcoins, began offering shares on the OTCQX trading under the symbol GBTC. SecondMarket, a subsidiary of Digital Currency Group, was BIT’s sole authorized participant and the only entity that was able to place orders to create or redeem BIT shares. The whole affair is rather convoluted but in 2014 Second Market starting accepting orders to redeem shares from BIT shareholders. The SEC told them to stop as their actions were in violation of Regulation M, a rule that is intended to prevent manipulation by individuals with an interest in the outcome of an offering, and prohibits activities that could artificially influence the market for a security.
The settlement with the SEC noted that BIT/SecondMarket acted on advice provided by counsel but apparently the legal team pushed things a bit too far.
In the settlement, SecondMarket must pay disgorgement of $51,650.11 plus prejudgment interest of $2105.68 for a total penalty of $53,755.79.
CoinDesk, a subsidiary of Digital Currency Group, noted the whole thing was created when Digital Currency Group CEO Barry Silbert was CEO of SecondMarket.
The filing by the SEC is available here.Sponsored Links by DQ Promote bitcoin 2048 bot download.
SecondMarket Looks to Make Bitcoin Investment Trust Open .
Almost three months have passed since SecondMarket launched the Bitcoin Investment Trust (BIT). How is it performing? Perhaps unsurprisingly (given bitcoin’s recent good fortune) not badly at all.
The BIT, launched as a vehicle for institutional investors to get into bitcoin, stood at a $61.1m (67,300 BTC) net asset value on Friday.
Shares in the Trust edged along for around two weeks after its inception on 26th September. Following this, they began creeping up, before beginning their meteoric rise around 4th November.
The net asset value (NAV) per share peaked a month later, before falling back. In short, the NAV of the BIT has tracked bitcoin’s own price movements very closely.
Barry Silbert, CEO at SecondMarket, said that performance has exceeded his expectations. The company’s initial goal was to hit $10m in asset centre management by the end of the year.
Silbert describes himself as part of bitcoin’s second phase. The virtual currency will go through five phases, he says.
The first two-year phase was driven by hobbyist hackers, while the second, starting in 2011, bought in early adopters and entrepreneurs.
Phase three has just started, and it is bringing venture capital companies to the table. “VCs are now supporting and investing in a lot of companies that are building infrastructure on top of the protocol, which the average person is not going to see, for the foreseeable future,” Silbert says.
So what’s to come in stage four? According to Silbert, Wall Street.
Wall Street has been largely disinterested in bitcoin to date, but a significant portion of his investors still come from there. They’re individual professionals who are piling money into the BIT on their own behalf. Silbert said:
“It’s not the funds yet, it's the people who work there. So it's the portfolio managers, the traders, it's the bank executives who are investing personally.”
Wall Street professionals are ahead of their companies for several reasons.
It’s fair to say that some institutions don’t yet feel well informed about virtual currency, but it’s also because in many cases they aren’t allowed to be.
Bitcoin is not yet defined as an asset, a commodity, or a currency, Silbert points out (indeed, it has characteristics of them all). “A lot of these institutions just don’t have the ability within their structure to invest in that.”
The other problem is that the auditors aren’t equipped to deal with it. And the reason for that is down to one of bitcoin’s fundamental characteristics: addresses are anonymous.
Like anyone, an auditor can see that a certain address holds inputs of a certain value. But it can’t prove that an investor owns them. “Access does not equal ownership, so you cannot prove title,” Silbert says.
Nevertheless, he believes that the funds will solve these problems over time. After all, SecondMarket did. It enlisted Ernst & Young as its auditor, showing that large accounting firms are prepared to get involved.
Wall Street professionals join another group of people who are blazing a trail in bitcoin by investing ahead of their own companies: technology entrepreneurs.
They are a natural fit, because they have a natural affinity with and understanding of technology. They ‘get’ virtual currency, and believe in its potential.
Individuals in this category can take advantage of self-directed Investment Retirement Accounts (IRAs), which are retirement investment accounts, generally held by a qualified custodian, in which the account’s owner makes the investment decisions.
“In the US it's very common for investors to use self-directed IRAs to do [activities] like angel investing, early-stage investing,” Silbert says.
Several of these IRAs - PENSCO, EnTrust, Equity Institutional, and Millennium Trust, are now listing the BIT as an investment option. But apparently, Fidelity Investments isn’t. Last week, CNBC and Marketwatch reported that the investment firm was allowing certain IRA clients to invest in bitcoin, but it subsequently changed its mind. ”
SecondMarket said in a statement:
“The Bitcoin Investment Trust was previously approved by Fidelity as an eligible investment for accredited clients in their self-directed IRA accounts and investments began closing last week. We understand that Fidelity has decided to reevaluate this decision.”
The BIT is currently most popular among tech entrepreneurs, who invest smaller sums, but in greater numbers.
Between all of these investment types, the median investment (where half of all investments are lower, and half are higher) is $30,000.
However, the average investment is around $222,000, pushed higher by some weighty investments. There is another group currently bringing the most money into the BIT: family offices.
These are teams appointed by families with a high net worth (typically $100m or more). Families at this level, which may have accumulated their money over many generations, will often use their own teams rather than outsourcing their investments to a fund manager.
Family offices, which serve single or multiple families, will handle a variety of personal services such as accounting, payroll, and wealth management.
“They're taking allocations from what we think to be one or two buckets, says Silbert: gold, and early stage funding. “Family offices tend to be very diversified,” he says. “They tend to have a very long-term investment time horizon.”
If a family office puts some of its gold into bitcoin (which recently exceeded the precious metal’s price) then it can increase that diversity, while treating bitcoin as an early stage startup can help such investors get in on the ground floor. With some analysts predicting a value of $98,500 per bitcoin, such allocation carries a lot of potential.
Family offices may be the largest investors now, but if, as Silbert believes, institutional investors get involved, they will be the largest group.
“Phase four is going to be Wall Street, so Wall Street [will have] bitcoin as an investable asset class,” he says, adding that we should expect to see this in the coming year.
All of this heralds the fifth and final phase of bitcoin, which will be mass consumer adoption, according to Silbert. That will happen in 2015, he says.
That promises to revolutionise the way people deal with money, driving efficiencies into the process and potentially saving people money. But for that to happen, the first four stages are necessary to evolve the virtual currency and drive liquidity into the market.
We’re still at the start of phase three, and liquidity is still limited, he says. That means that consumer users will lose a significant percentage on any exchange. This stops consumers from saving much money when using it as a form of money transfer, he says, adding:
“The reason is there's just not enough liquidity at either end of the transfer. But if the monetary base of bitcoin grows to be $20bn, $50bn, $100bn, all of that becomes possible. So I believe that the monetary base needs to grow first before the promise of bitcoin can be fulfilled.”
That’s what SecondMarket is trying to do with the BIT, Silbert concludes: increase awareness, make it more investible as an asset class – and finally, to drive up price by reducing supply.
The Trust has been buying bitcoins from exchanges, merchants, individual users, and miners.
It will be a while before the BIT is publicly traded. But having accrued around 90 investors and just over half a % of all bitcoins mined to date, the Trust is off to a healthy start.
Disclaimer: CoinDesk founder Shakil Khan is an investor in SecondMarket.
Bitcoin image via Shutterstock
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected]bitcoin linden dollar exchange rate.
SecondMarket goes all-in on Bitcoin launching a private trust
This evening, SecondMarket, took a further step into the Bitcoin space through announcing its new work with the Bitcoin Investment Trust (BIT), a private investment vehicle. The BIT is the first U.S.-based private investment vehicle to invest in bitcoin alone and received a $2 million seed investment from SecondMarket. Moving forward, shares of the BIT will be exclusively offered through SecondMarket. SecondMarket and BIT pushed out the following press release this evening:
Bitcoin Investment Trust Launches on SecondMarket
First U.S.-based private investment vehicle to invest exclusively in bitcoin begins raising capital
NEW YORK, Sept. 26, 2013 – The Bitcoin Investment Trust (BIT), a private investment vehicle, announced today that it has begun raising capital on SecondMarket. The BIT is an open-ended, private trust that is exclusively invested in bitcoin and derives its value solely from the price of bitcoin. It enables institutional and accredited individual investors to gain exposure to bitcoin without the buying, storing and safekeeping challenges of direct bitcoin ownership. The BIT is the first U.S.-based private investment vehicle to invest exclusively in bitcoin.
The BIT’s sponsor is Alternative Currency Asset Management (ACAM), a wholly-owned subsidiary of SecondMarket. Shares of the BIT are being exclusively offered through SecondMarket, a registered broker-dealer. SecondMarket has also made a $2 million seed investment in the BIT.
“We incubated the BIT to alleviate the problems of direct bitcoin ownership, including having to wire money to newly-established and potentially unregulated entities around the world,” said SecondMarket Founder and CEO Barry Silbert. “SecondMarket has a track record of making alternative investments accessible to a broader group of qualified investors, and our infrastructure enables streamlined capital raising, liquidity, and investor communications for funds and companies. Thus, we believe that a bitcoin-related investment vehicle is a great fit for SecondMarket.”
Bitcoin is a digital currency and global transaction network that was created to eliminate the challenges of using analog currency and payment mechanisms in a digital world. Since its inception in 2009, the market capitalization of bitcoin has risen to $1.5 billion, 24 million bitcoin transactions have been conducted, and more than 10,000 vendors now accept bitcoin. Proponents believe that bitcoin has potential as a store of value, global currency and/or global transaction network, and could disrupt the incumbents in e-commerce, remittance and other related industries. Only a finite number of bitcoins can ever be created; accordingly, bitcoin may not suffer the inflationary impact of fiat currencies.
“We believe that bitcoin may have significant upside given the size and scope of the industries that potentially are impacted by bitcoin,” Silbert noted. “However, bitcoin also faces regulatory uncertainty and widespread adoption issues that make investing in bitcoin a highly risky endeavor.”
As sponsor, ACAM has retained prominent service providers including Sidley Austin LLP (legal counsel), Ernst & Young (auditor), Continental Stock Transfer & Trust (transfer agent) and SecondMarket (marketplace, custodian and authorized participant). Investors who purchase shares in the BIT will have the opportunity to gain liquidity through periodic auctions on SecondMarket beginning in 2014. The Net Asset Value (NAV) of the BIT will be calculated daily and made publicly available.
For more information, visit bitcointrust.co.
Alternative Currency Asset Management (ACAM), a wholly-owned subsidiary of SecondMarket, is an asset manager focused on alternative currencies, including bitcoin. ACAM is the sponsor of the Bitcoin Investment Trust.
SecondMarket enable private companies, investment funds and other issuers to manage liquidity, raise capital and communicate with their stakeholders. SecondMarket is backed by premier investors, including FirstMark Capital, The Social+Capital Partnership, Li Ka-shing Foundation, Temasek Holdings, New Enterprise Associates (NEA) and Silicon Valley Bank. SecondMarket is a registered broker-dealer and member of FINRA, MSRB and SIPC and a registered alternative trading system (ATS) for private company stock. For more information, please visit secondmarket.com.
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Secondmarket bitcoin investment trust
Last updated on October 13th, 2017 at 09:36 am
SecondMarket, a firm that allows brokers to buy and sell shares in private companies, is now allowing investors to buy and sell shares through a Bitcoin trust. The mind behind this new project is Barry Silbert, an entrepreneur and cryptocurrency investor, who owns SecondMarket.