September 20, 2017

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Bitcoin Investment Trust Raises Offering to $1 Billion, Signs on Credit Suisse and Wedbush




Bitcoin Investment Trust Raises Offering to $1 Billion, Signs on Credit Suisse and Wedbush Securities

After the U.S. Securities and Exchange Commission (SEC) rejected two Bitcoin ETFs in March, Barry Silbert has stepped up his efforts to increase the chance of the Bitcoin Investment Trust (BIT) being approved. On Thursday, he filed an amendment to the BIT’s registration statement with the SEC which includes two major changes.

Also read: SEC Rejects Rule Change for Bitcoin ETF


Double Offering Size

Bitcoin Investment Trust Raises Offering to $1 Billion, Signs on Credit Suisse and Wedbush SecuritiesSilbert originally filed the S-1 registration statement form with the SEC on January 20 for the BIT, sponsored by his company, Grayscale Investments LLC. The proposed offering at the time was $500 million. He filed the first amendment to the BIT’s S-1 in March but did not alter the size of the proposed IPO.

Then, on Thursday, Silbert filed Amendment No. 2 with the Commission. It revises the BIT’s proposed offering to $1 billion, indicating his confidence in the demand for the BIT.

In comparison, Coin ETF’s offering was $100 million and Solidx’s offering was only $1 million.

Enlisting Big Financial Institutions

In addition to raising the proposed offering, the BIT’s Amendment No. 2 lists three large financial institutions as authorized participants. According to the amendment:

The Trust [BIT] has engaged Credit Suisse Securities (USA) LLC, KCG Americas LLC and Wedbush Securities as Authorized Participants. Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor.

Bitcoin Investment Trust Raises Offering to $1 Billion, Signs on Credit Suisse and Wedbush SecuritiesPreviously, the BIT shares were distributed solely by Genesis Global Trading Inc. These private placement transactions were exempt from the registration requirements of the Securities Act of 1933. After the IPO, if the SEC approves, the BIT shares will only be distributed by the authorized participants listed above and no longer by Genesis Global Trading Inc. Xapo remains the BIT’s only custodian.

Bitcoin Investment Trust Raises Offering to $1 Billion, Signs on Credit Suisse and Wedbush SecuritiesAuthorized participants are the only persons that may place orders to create and redeem baskets of the BIT’s shares, according to the filing. “Authorized participants may act for their own accounts or as agents for broker-dealers, custodians and other securities market participants that wish to create or redeem baskets.”

The two Bitcoin ETFs which the SEC already rejected did not name any specific authorized participants in their S-1 filings or amendments.

Chance of SEC Approval

Bitcoin Investment Trust Raises Offering to $1 Billion, Signs on Credit Suisse and Wedbush SecuritiesThe SEC has rejected two Bitcoin ETFs; one on March 10 and the other on March 28. The first decision is currently being reviewed by the Commission following Bats BZX Exchange’s petition for a review.

However, the decision to disapprove proposed rule changes for both Bitcoin ETFs concerns the nature of Bitcoin itself and of the Bitcoin market, not company-specific filings. The SEC cites the reasons for rejecting the listing and trading of Bitcoin ETFs as:

First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity [bitcoin] or derivatives on that commodity. And second, those markets [bitcoin markets] must be regulated.

Unless the outcome of the SEC’s review changes the above, most people in the Bitcoin community believe that no Bitcoin ETF will be approved in the near future. The Commission has designated May 10 as the date it would make a decision on the BIT’s proposed rule change. However, this deadline could be extended further.

Do you think Barry Silbert can get his Bitcoin Investment Trust approved? Let us know in the comments section below.


Images courtesy of Shutterstock, Grayscale, and SEC


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