Even after the Securities and Exchange Commission denied applications for two other bitcoin-based exchange traded funds, the third one isn’t giving up, amid the latest run-up in bitcoin prices sparked by a new investment wave in the sector.
The Bitcoin Investment Trust, sponsored by the firm Grayscale Investments LLC, filed an amended Form S-1 on Thursday that included two new provisions. The more significant is that the firm is increasing the proposed maximum size to $ 1 billion from $ 500 million. The second is that the firm has added Credit Suisse as an authorized participant to the offering, in addition to KCG and Wedbush Securities.
Grayscale Investments is a unit of Digital Currency Group, a bitcoin-related holding company founded by Barry Silbert.
The Bitcoin Investment Trust differs from the other proposed bitcoin ETFs in one key respect: it is already on the market. It trades on an over-the-counter exchange, under alternative reporting standards, and is available to accredited investors.
Its prospects with the SEC are unclear, though. The first two bitcoin ETFs the commission considered – from the Winklevoss twins’ Gemini Capital and another firm called SolidX Management LLC – were rejected because of the lack of regulations and transparency around bitcoin trading, a condition that would presumably apply to the assets held by the Bitcoin Investment Trust as well.
The SEC’s deadline for a ruling on Grayscale’s application is Sept. 22.
The SEC rejected SolidX’s application on March 28, when bitcoin was trading around $ 1,050. Since then, the price of bitcoin has skyrocketed. On Friday morning, it traded as high as $ 1,592, according to CoinDesk. The price of shares in the Bitcoin Investment Trust have been surging as well. They traded at $ 97.11 on March 28, and were at $ 145 on Thursday.
As of April 28, the fund had $ 232.6 million in assets under management. It has likely risen since then, and the increased demand is probably one reason behind the increased size of the offering.
Bitcoin shares have been on their usual roller coaster ride this spring. In the last week, they have risen roughly 20% amid a frenzy of trading among all manner of cryptocurrencies. Bitcoin and bitcoin competitors like ethereum, ripple, and litecoin have all been seeing their prices rise. Ethereum, the most compelling competitor to bitcoin, saw its currency cross over the $ 100 mark on Thursday for the first time. Also on Thursday, as if to underscore how volatile these markets are, bitcoin’s price dropped $ 100 in an hour, plunging from $ 1,594 to $ ,1495, and then recovered.
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One spark to the rally has been a surge of investing tied to a new method of capital raising being dubbed the initial coin offering, or ICO. The trend has grown sharply in recent months, driving up prices of dozens of cryptocurrencies. Startups are offering bitcoin-like tokens that are tradable, and raising millions quickly. Two relatively well known firm in the sector, Gnosis and Blockchain Capital, raised $ 12.5 million and $ 10 million, respectively, recently. But other startups are seemingly materializing overnight, and raising money, prompting warnings from industry insiders that these are highly risky investments, and likely to cost investors money.
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