Bitcoin Investment Trust Could IPO by October

Bitcoin Investment Trust (BIT) wants to be listed on NYSE Arca, according to a registration statement filed Friday with the U.S Securities and Exchange Commission (SEC). This is the second proposed Bitcoin investment trust listing on the exchange. The first, Solidx Bitcoin Trust, has yet to be approved by the SEC. Using Solidx as a model, it could take the Commission until October to make a decision whether to approve or disapprove BIT’s listing.

Also read: SEC Delays Decision on SolidX Bitcoin Trust

As Donald Trump prepared to be inaugurated as the 45th President of the United States on January 20, Barry Silbert filed a registration statement with the SEC seeking an initial public offering (IPO) for his flagship fund BIT. BIT’s shares are to be listed under the symbol GBTC on the NYSE Arca.

The IPO

“This is an initial public offering of the Trust’s Shares,” BIT’s registration statement reads. The shares “are designed to provide investors with a cost-effective and convenient way to invest in Bitcoin.” Grayscale Investments, LLC is the sponsor of the Trust, Delaware Trust Company is the trustee, the Bank of New York Mellon is the transfer agent, as well as the administrator, and Xapo Inc. is the custodian. The annual fee for investors will remain at 2 percent. The proposed maximum offering is $500 million of the Trust’s shares.

Silbert’s Grayscale Investments, LLC simultaneously announced that it “has ceased its ongoing private placement and will no longer issue shares of the Bitcoin Investment Trust through its previous 506(c) private placement.” However, BIT’s shares will continue to be quoted in the secondary market over-the-counter on OTCQX under the symbol GBTC while the registration with the SEC is pending approval. GBTC currently has assets under management of $164.21 million as of the end of December 2016.

Possible Time Frame

A possible time frame for the SEC to either approve or disapprove BIT’s listing on the NYSE Arca can be estimated using Solidx Bitcoin Trust as an example. Solidx originally filed with the Commission to list on the NYSE Arca on July 11, 2016.

After the company’s initial filing, the next step will be for the exchange to file with the SEC “a proposed rule change to list and trade shares” under NYSE Arca Equities Rule 8.201. For Solidx, the NYSE Arca filed with the SEC on July 13, 2016, which was two days after Solidx filed. Given that BIT’s filing was on a Friday, the NYSE Arca could file with the SEC early next week.

Then the proposed rule change would be published for comments in the Federal Register. This usually happens between two to three weeks after a filing with the SEC. For Solidx, it was published on August 2, 2016, approximately three weeks after filing. That means the proposed rule change for BIT should be published in the Federal Register sometime in the second or third week of February.

After publishing in the Federal Register, the Commission has 180 days to issue an order approving or disapproving the proposed rule change. However, it can also extend that period by a maximum of 60 days if necessary, which is a total of 240 days from the publication in the Federal Register. For Solidx, the SEC has already chosen to extend the consideration period as long as it could to March 30, 2017.

For BIT, 180 days from a likely date of publication in the Federal Register would be early August and 60 days after that would be early October.

Likelihood of Approval

The SEC has a habit of delaying making decisions on Bitcoin investment funds as seen by the delay for Solidx, taking the maximum time allowed by the Securities Exchange Act. Recently, Needham & Company, which provides investment coverage of BIT, suggested that the chance of the SEC approving Bitcoin ETFs is very low, at less than 25 percent.

According to Needham, there is no more extension available for the Commission after the 60 days. The firm also suggested that the Commission may not make a decision by the deadline, in which case “the proposed rule change is automatically approved,” Needham’s report reads. The firm believes this will increase the likelihood of an ETF being approved. Then, there’s the ‘Trump factor.’

The new administration may be more Bitcoin friendly than the previous administration. “We need to undo many regulations which have stifled investment in American businesses, and restore oversight of the financial industry in a way that does not harm American workers,” President Trump recently said.

Do you think the SEC will approve BIT’s listing by October? Let us know in the comments section below.

Images courtesy of WSJ, Wikimedia, Grayscale, SEC, Solidx

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