After registering its new Bitcoin Trust late last month with SEC, BlockFi just launched its product officially. The Trust is an investment vehicle for investors seeking access to Bitcoin(BTC), the leading digital asset.
Its entry into the market will provide investors with an alternative, more cost-effective entry point to the crypto market than similar existing products.
A 1.75% Sponsor Fee
The Trust will issue shares through a private placement. The aim of investing in the Trust is that the shares’ value must reflect the value of BTC held by the Trust, less the cost of the Trust and other liabilities. Trust stock will be available to global institutions and other eligible investors soon. BlockFi will later extend this eligibility to a single accredited investor in the United States.
The Trust charges a sponsor fee of 1.75%, and the company uses the cryptocurrency management service, Fidelity. According to the announcement, the company will use Coin Metrics’ indexing and price data services. Grant Thornton LLP will be the auditor of Blockfi Bitcoin Trust.
Trust’s early customers are expected to include BlockFi and select institutional investors to use BTC as a subscription. After the initial lock has expired, shares may be available for secondary investment on various recognized brokerage platforms.
Zack Prince, founder and CEO of BlockFi said that given the institutional activity in recent months and the demand for new professional investment vehicles, the timing would be ideal for the BlockFi Bitcoin Trust. As they work to increase availability to retailers, we hope this product will allow for greater investment in digital assets – the heart of BlockFi’s mission to combine crypto with traditional finance.
Eugene Feldman, Vice President, Institutional Services at BlockFi, believes the trust structure for this product will benefit investors and play an important role in increasing access to this emerging market. BlockFi Bitcoin Trust can easily meet the rapidly growing public demand for digital asset investment, and their decision to hold trust ownership of Fidelity’s Digital Asset will help shareholders have confidence in the security of their investment.
BlockFi Competitors
BlockFi’s Trust will rival Grayscale’s Bitcoin Trust (GBTC), offering an annual fee of 0.25% under the GBTC rating. Approximately 685,500 shares are outstanding, and each share represents 43.64 BTC as of February 8, 2021.
On February 2, 2021, Bitwise Asset Management announced that it had filed Form 211 with the US Financial Industry Regulatory Authority (FINRA) for the Bitwise Bitcoin Fund (BBF). BBF trades on the OTCQX Best Market, and Bitwise has not yet picked a ticker for the fund. In essence, in the announcement, President Teddy Fusaro stated that the fund had been managed since 2018, and the company expects a public listing from OTCQX.
