SecondMarket, a New York-based investment platform that specializes in alternative ventures, has launched Bitcoin Investment Trust (BIT), a private investment vehicle that will let wealthy and professional investors bet on the virtual currency.
The BIT is an open-ended, private trust that will exclusively invested in bitcoin and will derive its value solely from the price of bitcoin.
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The vehicle will purchase the virtual currency, store it in a virtual safe of sorts and allot new shares of stock to shareholders as they buy in.
The fund was launched with seed investment of US$2.25 million from SecondMarket and has a minimum investment in the fund is US$25,000.
SecondMarket said it will charge annual administrative and safekeeping fee of 2%. The front-end fee, which is waived for investments made in 2013, will be 1.5%.
Once investors are allowed to sell shares on SecondMarket, the back-end fee will be 1.5%, SecondMarket added.
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By GlobalDataInvestors who buy into the bitcoin trust can get liquidity through auctions that will start in 2014. The value of bitcoin will be calculated daily.
According to SecondMarket, the fund will be open to accredited investors, those who meet specific criteria such as, for an individual, earning at least US$200,000 a year for the last two years.
Mark Murphy, a SecondMarket spokesman, said: "The fund is regulated by the US Securities and Exchange Commission, but is not registered with the agency."
Barry Silbert SecondMarket founder and CEO said: "We believe that bitcoin may have significant upside given the size and scope of the industries that potentially are impacted by bitcoin. However, bitcoin also faces regulatory uncertainty and widespread adoption issues that make investing in bitcoin a highly risky endeavour."
