Grayscale Investments, the asset management subsidiary of Digital Currency Group, is filing to register its Bitcoin Trust as a Securities and Exchange Commission (SEC) reporting company.
If the U.S. regulator deems the Form 10 filing effective, the trust’s shares would be registered under the Exchange Act of 1934, potentially making it the first cryptocurrency investment vehicle to become a reporting company.
The shares are already publicly traded on an over-the-counter market, but reporting company status would improve transparency and liquidity for shareholders.
For example, the trust would have to make public filings of its quarterly and annual reports, as well as updates on unscheduled material events and corporate changes, just like Apple, ExxonMobil and AT&T do.
As a reporting company, the trust could potentially attract investors who are currently restricted from participating in any investment vehicles that aren’t SEC-regulated reporting companies, Grayscale said.
“The fact that it would be an SEC reporting company would perhaps give some of those institutions greater oversight or greater comfort,” said Grayscale managing director Michael Sonnenshein in a phone interview.
Participants in the bitcoin trust could also more quickly liquidate their holdings if needed. Currently, investors must hold their shares for at least 12 months. If the registration statement is deemed effective, this could drop to six months, Sonnenshein said.
Grayscale manages some $2.5 billion in assets across 10 different trusts, he said.
The SEC usually takes 60 days to respond to filings like the one Grayscale submitted Tuesday, though “that is by no means guaranteed,” Sonnenshein said, since the U.S. securities regulator may request edits or ask questions.
Should Grayscale successfully register the bitcoin trust, it would have to file 10-Q, 10-K and 8-K reports with the SEC, similarly to other publicly traded companies. Shareholders with more than 5 percent of the trust’s shares would be required to file beneficial owner reports. While the trust has no directors or officers, if it did, any with more than 10 percent of outstanding shares would have to report their transactions.
Sonnenshein said he could not disclose how many investors or institutions this might include.
Still, he said, the move should serve the growing demand for the bitcoin trust.
The trust was the second-most actively traded security on the OTCQX market last month, he said, following Roche, a research-focused healthcare firm.
“We’re seeing an ever-growing demand for exposure to bitcoin through a security or an access product like we offer,” Sonnenshein said.
Michael Sonnenshein image via CoinDesk archives