Grayscale Launches Ethereum Classic Trust Modeled on Bitcoin Investment Trust – Featured Bitcoin News

Grayscale Investments is preparing to launch a new Ethereum Classic (ETC) investment product 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 Barry Silbert, CEO and Founder of Grayscale, to learn more about this new product.

Also Read: Needham: Likelihood of Approval for 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 Bitcoin’s price was around $127.7 and the market cap was just around $1.469 billion. The trust was modeled after the SPDR® Gold Shares ETF created for investors looking for Bitcoin exposure. At 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, which is awaiting listing on the NYSE Arca, has halted 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 only for accredited investors, Grayscale is introducing another private investment vehicle called Ethereum (ETC) Investment Trust (EIT). It allows investors to participate in Ethereum Classic price movements without actually owning an ETC.

The ETC Investment Trust

According to Silbert, the new product is based on the BIT. “It will be a perpetual trust holding ETC,” he described. Therefore, the Trust may issue and redeem Shares at any time. Regarding the decision to create this new trust, Silbert told Bitcoin.com:

We are excited about the potential of Ethereum Classic and its underlying token (ETC) and believe there is a demand from investors looking to invest in a vehicle that allows them to participate in price action through a titled security.

ETC is the newer of the two Ethereum cryptocurrencies that emerged from the July 2016 hard fork of the Ethereum blockchain. It is “a continuation of the original Ethereum blockchain – the classic version that preserves the unadulterated history; free from external disturbances and subjective manipulation of transactions,” the website describes. While ETC is the original protocol and has fewer modifications than the other Ethereum cryptocurrency (ETH), many of the developers and community behind Ethereum have switched to ETH.

ETC is now traded on multiple exchanges including Bitfinex and Poloniex. At press time, the cryptocurrency is trading at $1.40, about half its all-time high 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 investors”. The Grayscale website now describes their new product the same way it did at the BIT, saying:

The EIT is not registered with the SEC and the shares of the EIT are being offered in a private placement pursuant to Rule 506(c) under Regulation D.

The Securities Act of 1933 requires all corporations to register any securities they offer or sell with the SEC. However, there are some exceptions such as provided by Regulation D (Reg D), which allows a company to sell its securities to accredited investors without having to register 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 who has had net worth of more than $1 million or income of more than $200,000 in the last two years and reasonably expects the same for the current year qualifies.

While there is still work to be done before the EIT rolls out, Silbert said the company plans “to roll out in the first quarter,” adding that it is “waiting for monetary policy (supply cap) to be finalized.”

What do you think of the ETC Trust? Let us know in the comment section below.

Images courtesy of Shutterstock, SEC, Grayscale, Ethereum Classic

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Kevin Helms

As an Austrian economics student, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the interface between economics and cryptography.

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