On Monday, November 16, 2020, Grayscale Bitcoin Trust announced that it holds more than 500,000 bitcoins, valued at more than $8.3 billion, in its Bitcoin Trust.
Founded in 2013 by Barry Silbert, who is also the founder and CEO of the Digital Currency Group (DCG), Grayscale Bitcoin Trust is sponsored by Grayscale Investments, one of the world's largest digital currency asset managers.
It is a financial vehicle that allows investors to trade shares in trusts that hold large amounts of Bitcoin. In other words, you can buy, hold and sell Bitcoin shares in the same way as stocks, without having to worry about the complex transactions that can result from holding the cryptocurrency itself.
A trust is the result of an act by which a person transfers, from his or her patrimony to another patrimony that he or she sets up, property that he or she assigns to a particular purpose and that a trustee undertakes to hold and administer.
The company requires a minimum investment of $50,000 and applies an annual rate of 2.0% that accumulates daily. Subsequently, Grayscale lists the fund on public stock exchanges, which means that anyone can trade shares in it.
The shares in the fund track the price of Bitcoin, but only approximately.
Fund shares may trade at a premium or a discount to the actual price of Bitcoin. Historically, they have almost always traded at a premium. This is good news for Grayscale and its investors, who are making money from this premium, but bad news for investors.
On its side, Grayscale Investments is a company that manages crypto investment funds. It is a subsidiary of the Digital Currency Group, which also owns the company Coindesk, which specializes in news and digital media in cryptocurrency.
Grayscale Investments, LLC is the world's largest digital currency asset manager with over $2.6 billion in assets under management as of January 17, 2019. As a member of the Digital Currency Group, Grayscale accesses the world's largest digital currency intelligence network to create better investment products.
The company began as a private placement with accredited investors but subsequently received approval from the Financial Industry Regulatory Authority (FINRA) to publicly trade the qualifying shares.
FINRA or the Financial Industry Regulatory Authority is an independent non-governmental organization that drafts and enforces rules governing U.S.-registered brokers and dealers. The mission of this organization is to 'protect the investing public from fraud and malpractice'.
Based in New York City, Digital Currency Group (DCG) is a venture capital firm focused on the digital currency market and so far has supported approximately 160 blockchain and crypto companies such as Luno, Ripple, Coindesk, Circle, Kraken and many others.
In 2014, Luno is the first crypto company in which DCG has invested for the first time. Barry Silbert, founder and CEO of Digital Currency Group said at the time:
'We are proud to have supported Luno as an early investor and share the same commitment to create mission-driven companies that can help transform traditional financial services and enhance the economic freedom of people around the world.»
Launched in 2013, Luno today has a team of nearly 400 people and is a leading stock exchange on the African continent and a major player in South East Asia.
On September 9, 2020, Luno stated on their website that the crypto company had been acquired by Digital Currency Group.
Luno explained that as the first investor, DCG has really been with them from the beginning and they have always had the same vision to move the world towards a better financial system. However, Luno will continue to operate as an independent, wholly-owned subsidiary of DCG.
Source: Digital Currency Group website
Via their website, Marcus the co-founder and CEO of Luno explained:
'It has become clear to me that the most effective way to move the world towards a new and better financial system is to have a company and business model that is deeply integrated across the entire industry and value chain, and above all a model where these parties are able to maintain their own identity and brand while 'freely coordinating' their activities. '
DCG enables its subsidiaries to operate as independent companies, providing them with leadership, partnerships and investment capital to help them scale their operations.
On January 21, 2020, GBT became an SEC reporting company, registering its shares with the Commission and designating the Trust as the first digital currency investment vehicle to obtain SEC reporting company status.
The Company announced that the registration statement on Form that it filed with the Securities and Exchange Commission (SEC) on behalf of the Trust has been deemed effective. The Trust is now a reporting company to the SEC and its shares are registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the 'Exchange Act').
This will allow accredited investors who purchased shares in the Trust's private placement to have a faster liquidity opportunity, as the statutory holding period for the shares in the private placement would be reduced from 12 months to 6 months under SEC rules. Investors now have access to purchase and sell public shares of the Trust under the symbol GBTC.
The SEC or Securities and Exchange Commission is the U.S. federal agency responsible for regulating and supervising the financial markets. Its purpose is to enforce the new financial laws, promote market stability and, above all, protect investors from corporate abuse in connection with the purchase and sale of shares and the information made public.
As of October 2020, the Grayscale Bitcoin Trust represents $6.5 billion of privately invested Bitcoin assets and it continues to acquire more as of November 2020, the shares of the Grayscale Bitcoin Trust represent $15.62 of Bitcoin each.
As of November 16, 2020, Grayscale's Bitcoin Trust holds more than 500,000 Bitcoins, valued at more than $8.3 billion, in its Bitcoin Trust.
Prior to March 2020, Grayscale's Bitcoin Trust (GBTC) had acquired more than 300,000 BTCs.
The Grayscale Bitcoin Trust held 456,537 Bitcoin, representing 58% of the 786,059 Bitcoin held by publicly traded companies, according to Bitcointreasuries.org.
The digital asset management company this week purchased an additional 15,114 Bitcoin for $241 million, bringing the total number of Bitcoin the company owns to 506,000.
According to Chainalysis, Grayscale could own 3.37% of the remaining outstanding Bitcoin offering.
In a tweet on Monday, November 16, Grayscale stated:
'Grayscale Bitcoin Trust now holds more than $500,000 BTC. Yes, you read that correctly. '
Source: Grayscale Twitter account
Grayscale Bitcoin Trust is one of the largest digital currency asset managers in the world. It now owns half a million Bitcoin, representing 2.69% of Bitcoin's (BTC) supply and market share. Oe million Bitcoin for soon?
Written by Laetisia Harson, Project Manager
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