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FINRA Approves First Publicly Traded Bitcoin Fund

The Financial Industry Regulatory Authority approved the first publicly traded bitcoin investment fund this week.

Bitcoin Investment Trust (BIT), created by the secondary market trading firm SecondMarket and sponsored by Grayscale Investments, will issue a publically traded stock on OTCQX, an over-the-counter marketplace operated by OTC Markets Group, under the ticker symbol GBTC. 

Since 2013, BIT has been open only to private, accredited investors. Now, applying to FINRA for approval to trade on the OTC exchange, those shares of the trust can be sold, and traded, by any investor. 

Many people still struggle with simply purchasing bitcoins. It often involves wiring money to an unregulated exchange in another country. Michael Sonnenshein, the director of sales and business development at BIT, thinks that a publicly traded trust will make it easier and safer for investors. 

“People are very excited about digital currencies and think they should have some exposure to it, and having a security to buy it on a stock market is more familiar than buying it directly,” Sonnenshein said. BIT also custodies the bitcoin underlying the security, which Sonnenshein said reduces the risks.

The hope is that BIT will provide advisors with a new way to diversify client portfolios, or at least help clients who are curious about the asset.

“There is a growing interest,” Sonnenshein said. “The advisor community at the moment is not all that educated about the technology or the opportunity.”

SecondMarket, a firm that specializes in trading private securities, created BIT in 2013 following the growth of its over-the-counter bitcoin trading desk. Sonnenshein said the private trust attracted assets from 200 accredited investors, and the decision to go public was to provide the shareholders with more liquidity.

CNBC compared the launch of BIT to the SPDR Gold ETF, which made it easier to invest in gold.

Cameron and Tyler Winklevoss, the twins most known for their legal tussle with Mark Zuckerberg over the creation of Facebook, are also trying to get create an easier path for investors to own the currency with a bitcoin ETF, which is still awaiting approval by regulators. They are also working on Gemini, a virtual-currency exchange they say will be the “NASDAQ of bitcoin.”


TAGS: Technology
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