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SecondMarket Launches Bitcoin Investment Trust

September 27, 2013 News

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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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Top Bitcoin News Last Week: Mt.Gox Changes, Coingig, Winklevoss IPO

July 5, 2013 News

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Bitcoin News

A roundup of the top Bitcoin news from June 27 to July 4.

Thursday, June 27

Friday, June 28

Saturday, June 29

Monday, July 1

Winklevoss Twins File IPO to Bring Bitcoin to the Public

Tuesday, July 2

NYC’s Inside Bitcoins Conference Attracts Leading Experts

Thursday, July 4

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Winklevoss Twins File IPO to Bring Bitcoin to the Public

July 1, 2013 News

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The Winklevoss twins, best known for suing Mark Zuckerberg for stealing their idea for Facebook, today filed an S-1 to create an exchange-traded fund for Bitcoin.

Tyler Winklevoss explained the motivation behind going public, “The trust brings bitcoin to Main Street and mainstream investors to bitcoin. It eliminates the friction of buying and reduces the risks associated with storing bitcoin while offering similar investment attributes to direct ownership.”

Cameron and Tyler Winklevoss have already made several headlines when it comes to Bitcoin. First, they claimed to own 1% of the outstanding bitcoins available. Later, they announced that they were investors in Bitcoin startup BitInstant. They operate an investment fund called Winklevoss Capital.

The filed S-1 outlines the Winklevoss Bitcoin Trust, a vehicle that the public can invest in and simply reflects the value of Bitcoin.

The investment objective of the Trust is for the Shares to reflect the performance of the Blended Bitcoin Price of Bitcoins, less the expenses of the Trust’s operations. The Shares are designed for investors seeking a cost-effective and convenient means to gain exposure to Bitcoins with minimal credit risk.

The Bitcoin Network is a recent technological innovation, and the Bitcoins that are created, transferred, used and stored by entities and individuals have certain features associated with several types of assets, most notably commodities and currencies. Apart from the Financial Crimes Enforcement Network of the US Department of the Treasury (“FinCEN”), major US regulators such as the US Commodity Futures Trading Commission (“CFTC”), Internal Revenue Service (“IRS”) and SEC, have yet to make official pronouncements or adopt rules providing guidance with respect to the classification and treatment of Bitcoins and other Digital Math-Based Assets for purposes of commodities, tax and securities laws. The Sponsor believes that, on balance, the important features of Bitcoins and other Digital Math-Based Assets are those that are characteristics of commodities and therefore has referred to and discussed these assets as such. It is not known whether US or foreign regulators will share this view, adopt a single, different view or espouse a variety of differing views; this regulatory uncertainty creates risks for the Trust and its Shares. See “Risk Factors—Risk Factors Related to the Regulation of the Trust and its Shares.”

The Sponsor believes the Trust to be the first exchange-traded product that seeks to track the price of a Digital Math-Based Asset such as Bitcoins (a “DMBA ETP”). Some of the distinguishing features of the Trust and its Shares include directly holding Bitcoins using the Trust’s proprietary Security System, storage of the Trust’s Bitcoins in various premises of the Trustee located in the United States, the experience of the Sponsor’s management team, the use of [TRUSTEE] as custodian, third-party vault inspection and the use of a security consultant to advise on upgrades to the Trust’s technology and custody procedures. See “Business of the Trust.”

Cameron Winklevoss is listed at the CEO, while Tyler is listed as the CFO of the Winklevoss Bitcoin Trust.

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Winklevoss Twins Invest in Bitcoin Startup BitInstant

May 17, 2013 News

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Winklevii Invest in BitInstant

“We’re definitely pretty fascinated by it. The classic issue with Bitcoin is that it’s very early days.” — Tyler Winklevoss

The WinkleVoss twins, the two Harvard graduates who sued Mark Zuckerberg over the creation of Facebook, have been getting into Bitcoins. First, it was learned that they own 1% of the Bitcoin economy, and today TechCrunch learned that the Winklevii have invested in BitInstant, a Bitcoin startup.

BitInstant, a New York City based startup that operates an online platform for buying and selling Bitcoins, has raised $1.5 million in a seed funding round led by Winklevoss Capital with the participation of other strategic investors including money services veteran David Azar. The investment was closed this past fall, but the Winklevosses are just now publicly announcing it in the lead-up to the Bitcoin Foundation’s 2013 Conference being held in Silicon Valley this weekend.

Via TechCrunch.

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