Blog Digital Currency Perspectives January 28, 2020

SEC Deems Digital-Currency Investment Vehicle a Reporting Company

On January 21, 2020, Grayscale Bitcoin Trust (the “Trust”) became the first digital currency investment vehicle to attain the status of an SEC reporting company. The Trust’s sponsor, Grayscale Investments, LLC (“Grayscale”), is a digital currency asset manager that offers cryptocurrency investment products that provide exposure to Bitcoin and Ethereum, among other assets. The Trust holds Bitcoin in particular, and issues shares to investors that represent an ownership interest in the Trust.  The purpose of the Trust is to provide investors a cost-effective and convenient way to invest in Bitcoin without the complications that may result from buying and holding Bitcoin directly.  Since 2015, shares of the trust have traded publicly on OTCQX under the ticker symbol GBTC.

On November 19, 2019, Grayscale filed a Form 10 with the Securities and Exchange Commission (the “SEC”) on behalf of the Trust as an emerging growth company.  On January 21, 2020, the SEC deemed effective the Registration Statement included on the Form 10.  Thus, the Trust is now an SEC reporting company, and its shares are registered pursuant to Section 12(g) of the Securities Exchange Act of 1934.  Consistent with this registration, the Trust will now file quarterly and annual reports as well as audited financial statements with the SEC.  And accredited investors who own or purchased shares from the trust’s private placement now have an earlier liquidity opportunity because the holding period for shares purchased through the private placement will be reduced from twelve to six months.  The reduction will become effective after the Trust has been a reporting company for at least 90 days and has satisfied the other requirements under Rule 144 of the Securities Act of 1933.

The SEC’s approval of the Trust’s registration indicates the SEC’s openness to the use of digital assets as vehicles for investment when companies operate in a manner consistent with the securities laws.