Thursday, October 21, 2021

Silbert-Backed Bitcoin Investment Trust Withdraws SEC Application

Silbert-Backed Bitcoin Investment Trust Withdraws SEC Application

Bitcoin Investment Trust (GBTC), a bitcoin fund backed by Barry Silbert’s Grayscale Investments LLC, has withdrawn a request to publicly list its shares. The company cited a lack of regulatory progress in the industry as its reason.

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‘Not Enough Regulatory Developments’

Grayscale Investments is part of Silbert’s Digital Currency Group of companies.

GBTC raised eyebrows a few months ago when some investors noted its shares had increased 1,600 percent in the past two years — despite bitcoin itself rising 973 percent in the same time. One share in the Trust still sold for $739.50 USD this week, although one share holds less than $373 worth of bitcoin.

Reuters reported that Intercontinental Exchange Inc’s NYSE Arca exchange withdrew a request with the U.S. Securities and Exchange Commission (SEC) to list the fund. Grayscale said it “does not believe there have been enough regulatory developments to prompt the SEC to approve” the Trust.

Grayscale’s Trust Trades Over the Counter (OTC)

Withdrawing the public listing application doesn’t mean the Bitcoin Investment Trust can’t exist at all. The fund trades over the counter (OTC) through approved brokers, meaning those wishing to buy a stake still can. However a public listing would lend a lot more credibility and potentially bring in larger investors.

Barry Silbert, Digital Currency Group
Barry Silbert, Digital Currency Group

That could also be a problem. GBTC’s “premium to net asset value” is much higher than most regulated funds, and an approved listing would probably include mechanisms to reduce that.

SEC approval was looking unlikely anyway, after the regulator first rejected the Winklevoss twins’ Bitcoin ETF listing in March. Although the SEC said it would review the decision, there haven’t been many updates since.

The SEC said cryptocurrencies are currently risky, with lax KYC/AML requirements at some exchanges — notably China’s. Given the past month’s events in that country, it appears the Chinese authorities also agree.

Would you buy shares in a bitcoin exchange traded fund? Let’s hear your thoughts.


Images via Twitter (@BarrySilbert), Pixabay

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