Grayscale Investments is gearing up to launch a new investment product for Ethereum Classic (ETC) in the first quarter of this year. This will be the second investment product for the company; the first was the Bitcoin Investment Trust (BIT). Bitcoin.com caught up with Grayscale CEO and founder, Barry Silbert, to find out more about this new product.
Also read: Needham: Probability of Approval for a Bitcoin ETF ‘Very Low’
From BIT to ETC Trust
It has been over three years since Grayscale launched its first product, the BIT, on September 25, 2013, when the price of Bitcoin was roughly $127.7 and the market cap was only about $1.469 billion. Modeled on the SPDR® Gold Shares ETF, the Trust was created for investors looking for Bitcoin exposure. By the end of last year, it had $164.21 million in assets under management. The BIT has always been a private placement for accredited investors, trading over-the-counter. Now, the company, waiting to be listed on the NYSE Arca, has ceased all private offerings but continues to trade on OTCQX under the symbol GBTC.
As the BIT begins its journey away from being a private vehicle for only accredited investors, Grayscale is introducing another private investment vehicle called the ‘Ethereum (ETC) Investment Trust‘ (EIT). It allows investors to gain exposure to the price movements of Ethereum Classic without actually owning any ETC.
The ETC Investment Trust
According to Silbert, the new product is modeled after the BIT. “It will be an open-ended trust that holds ETC,” he described. As such, the Trust can issue and redeem shares at any time. Regarding the decision to launch this new Trust, Silbert told Bitcoin.com:
We’re excited about the potential for Ethereum Classic and the underlying token (ETC) and believe there is demand from investors that would like to invest in a vehicle that enables them to participate in the price movement via a titled security.
ETC is the newer of the two Ethereum cryptocurrencies resulting from the July 2016 hard fork of the Ethereum blockchain. It is “a continuation of the original Ethereum blockchain – the classic version preserving untampered history; free from external interference and subjective tampering of transactions,” its website describes. While ETC is the original protocol and has fewer modifications than the other Ethereum cryptocurrency (ETH), many of the developers and the community behind Ethereum have moved on to ETH.
ETC now trades on several exchanges including Bitfinex and Poloniex. At press time, the cryptocurrency is trading at US$1.40, approximately half of its all-time-high price from immediately after the split, with a market cap of around $124.6 million.
For Accredited Investors
Silbert confirmed that the EIT “will be launched as a private vehicle open to accredited investor.” The Grayscale website now describes its new product just as it did with the BIT, stating that:
The EIT is not registered with the SEC and the EIT’s shares are being offered in a private placement pursuant to Rule 506(c) under Regulation D.
The Securities Act of 1933 mandates all companies to register any securities with the SEC that they are offering or selling. However, there are some exemptions such as one provided by Regulation D (Reg D) which allows a company to sell its securities to accredited investors without registering with the Commission by filing Form D, ‘Notice of Exempt Offering of Securities’.
There are many ways to qualify as an accredited investor. For example, anyone with a net worth exceeding $1 million or with an income of more than $200,000 in the two most recent years and reasonably expects the same for the current year, is qualified.
While there is much to do before launching the EIT, Silbert said the company is “Planning to launch in Q1,” adding that they are “waiting for the monetary policy (supply cap) to get finalized.”
What do you think of the ETC Trust? Let us know in the comments section below.
Images courtesy of Shutterstock, SEC, Grayscale, Ethereum Classic
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