What Is Grayscale Bitcoin Trust? Institutional investors can get exposure to bitcoin through the Grayscale Bitcoin Trust, a traditional financial product. Let's take a closer look.
What Is Grayscale Bitcoin Trust?
The Grayscale Bitcoin Trust is the biggest bitcoin investment vehicle in the world and the first of its kind to report regular financial reports to the US Securities and Exchange Commission (SEC).
The largest digital asset management company in the world and a member of the Digital Currency Group (DCG) led by founder and CEO Barry Silbert, Grayscale Investments offers a variety of traditional financial products that track cryptocurrency prices. GBTC shares are one of those products.
The Grayscale Bitcoin Trust, which was first introduced in 2013 as the Bitcoin Investment Trust (BIT), gives investors access to the top cryptocurrency through an open-ended private trust that has so far amassed more than 649,130 BTC, or nearly 3.1% of the total supply of bitcoin that is currently in circulation.
Why Should You Buy GBTC Shares?
The key selling point of bitcoin is, to put it simply, that it is hassle- and stress-free.
Without actually purchasing bitcoin, investors can speculate on it thanks to the Grayscale Bitcoin Trust. By doing so, it is unnecessary to plan for the secure custody and storage of the digital asset, which also saves on a variety of associated costs. Comparatively to central Crypto exchanges, which frequently have insufficient liquidity, it also enables institutional investors to complete large buy orders with minimal slippage. Slippage is when a trade is executed at a different price than expected, for example when placing a large buy order drives up an asset's price.
As traditional security, GBTC shares come with much clearer tax guidance and the option to hold shares in a number of tax-advantaged accounts, such as Roth IRAs or 401(k)s.
Who can invest in the Grayscale Bitcoin Trust?
Anyone can buy GBTC shares on the secondary market through platforms like Fidelity or Schwab, but only authorized investors are allowed to take part in the daily private placements.
A person who can prove an annual income of at least $200,000 or combined spousal income of $300,000 for the previous two years with the expectation of receiving the same or more during the current year is considered to be an accredited investor under the United States 39 Act of Secu1 Rule 1 Regulation D.
In August 2020, the United States Securities and Exchange Commission expanded the definition to include people with “defined measures of professional knowledge, experience or certifications in addition to the existing tests for income or net worth.” As a result, those who can prove a certain level of sophistication can become accredited investors without having to make six figures a year in income.
Almost eight years ago, when the Grayscale Bitcoin Trust originally went live, only accredited investors were able to buy the shares. However, the Grayscale Bitcoin Trust was given permission by the Financial Industry Regulatory Authority (FINRA) to offer GBTC shares to retail investors on the secondary market in 2015.
What Is Grayscale Bitcoin Trust? Who can invest in the Grayscale Bitcoin Trust? - Hopefully, this article can help you to get some knowledge.
