Grayscale Investment has submitted a filing with the U.S. Securities and Exchange Commission (SEC) that could change the status of its popular bitcoin investment product.
On November 19, 2019, the company filed a securities registration form with the SEC which, if approved, would see its popular Bitcoin Trust product become the first-ever digital currency investment product to be regulated by the SEC.
The Bitcoin Trust was initially launched as a way to give more investors exposure to bitcoin with some barriers to entry eliminated, like the need to protect your own private keys. The pursuit of regulation by the SEC through this voluntary filing appears to be an effort in the same vein.
“This filing is the latest step on the road to regulatory maturity for digital currencies,” according to a Grayscale press release sent to Bitcoin Magazine. “After creating the first FINRA-regulated Bitcoin investment product, Grayscale once again is leading the industry in facilitating responsible regulatory oversight of the asset class.
If the SEC approves the filing, the structure of the Bitcoin Trust would not change, nor would its regulatory classification.
“This is a voluntary filing that, if deemed effective, would designate the Trust as an SEC reporting company and register its shares pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),” the press release reads.
An SEC reporting company is also called a “reporting issuer.” By becoming a reporting company, Grayscale would likely be subject to periodic and ongoing disclosure requirements designed to keep investors informed on major updates concerning their investment.
Potential Changes for Bitcoin Trust Investors
Following approval from the SEC, accredited Bitcoin Trust investors would see a reduction in the statutory holding period for their investment from 12 months to six months, giving them liquidity sooner. This means that investors who had previously purchased shares in the trust’s private placement could resell them on the secondary market within six months.
The trust would also be changing how it files quarterly and annual reports. With SEC approval, it would have to file its reports and audited financial statements as 10-Qs and 10-Ks — specific report templates as designated by the SEC.Grayscale’s Bitcoin Trust became the first publicly traded bitcoin fund in 2015 (as the Bitcoin Investment Trust), having received approval on the OTC Markets Group’s OTCQX exchange.
The company, which is behind a significant “Drop Gold” advertising campaign, has seen its bitcoin product rise in popularity since its launch. Per a recent quarterly report, Grayscale attracted $254.9 million in net investments for its products, with two-thirds of the inflows secured attracted by the Bitcoin Trust.