SecondMarket Launches Bitcoin Investment Trust

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“I’m excited about today” – Barry Silbert, CEO of SecondMarket

In a personal and passionate email, Barry Silbert, CEO of SecondMarket, announced that his company was launching a new investment vehicle called the Bitcoin Investment Trust (BIT). This trust is available only to institutional and accredited investors and derives its value solely from the price of Bitcoin.

In other words, it’s like buying Bitcoin.

“Over the past two years I’ve become a big believer in bitcoin, the digital currency and transaction network,” said Silbert. “Friends, colleagues – honestly, anyone who would listen – have heard me describe the potential benefits of bitcoin. It could be this generation’s store of value, or a true global currency, or a better money transfer network. Or all three.”

The benefit of investing in this trust, Silbert added, is that qualified investors can gain exposure to the price movement of Bitcoin without the challenges of buying, storing, and safekeeping Bitcoin. This is detailed in SecondMarket’s Bitcoin Education Center.

The Bitcoin Investment Trust (BIT) is a private, open-ended trust invested exclusively in Bitcoin. The sponsor of the trust is Alternative Currency Asset Management LLC, a wholly owned subsidiary of SecondMarket Holdings, Inc.

The BIT was created for accredited investors looking for exposure to bitcoin through an investment vehicle as opposed to a direct investment. The BIT solves the challenges of buying, storing and safekeeping bitcoins.

Below is their full investor presentation.

Fee Structure

There is a 1.5% front end fee (waived for 2013), 2% management fee, and 1.5% back end fee. Or, more simply, for a 5% fee you own a shares in a vehicle that tracks a decentralized digital currency meant to democratize money.

This raises the question: is Bitcoin that difficult to buy for qualified investors that they would prefer to own shares in a trust that has a 5% fee structure?

Where are the Winklevosses?

This move by SecondMarket follows the high profile S-1 filing by the Winklevoss twins, who intend to create an ETF that tracks similarly Bitcoin but provides qualified investors an easier path to own the digital currency.

About SecondMarket

SecondMarket calls itself a better market, “empowering entrepreneurs by reinventing the modern stock market and redefining the modern company. We’re enabling companies to provide liquidity, raise capital and communicate with key stakeholders through products that give control to companies, not to Wall Street. We’re changing the market, so entrepreneurs can change the world.”

The company became popular for its ability to provide liquidity for hot private stocks like Facebook and Groupon before their IPOs. Today, SecondMarket has diversified and is creating its own investment vehicles like the Bitcoin Investment Trust.

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