BlockFi introduces its Bitcoin Trust to compete with GBTC

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Cryptocurrency financial services firm BlockFi launches its Bitcoin (BTC) Trust to deliver easy access to BTC for institutions and other private investors

Cryptocurrency financial services firm BlockFi announced yesterday that it had launched the BlockFi Bitcoin Trust (“the Trust”). According to the press release, the BlockFi Bitcoin Trust is an investment vehicle for institutional investors and accredited private investors to gain easy access to BTC.

BlockFi said, “The Trust will issue shares via private placements, and the investment objective of the Bitcoin Trust is for the value of the shares to reflect the value of BTC held by the Trust less the Trust’s expenses and other liabilities“.

Furthermore, the Trust shares will be available to global institutions and other accredited investors in the near-term. The eligibility will be expanded in the future to include accredited individual investors in the United States.

BlockFi and a few institutional investors would be the Trust’s initial subscribers and would use BTC to subscribe. Following the initial lockup expiration, secondary investors would gain access to the shares on various brokerage platforms.

The Trust will charge investors a sponsor fee of 1.75%, and the firm will use custodial services from Fidelity’s crypto arm. The firm added it would use Coin Metrics’ index services and pricing data, and Grant Thornton LLP will serve as the Trust’s financial auditor.

Zac Prince, the CEO of BlockFi, said the level of financial institutional activity in the crypto space in recent months has birthed the need for new, professional-grade investment vehicles and Blockfi Bitcoin Trust is ideal for them.

Prince added that the firm is working on broadening the Bitcoin Trust’s availability to more retail brokers and expects the product to lead to more significant investments in Bitcoin and other cryptocurrencies. BlockFi aims to bridge the gap between cryptocurrencies and the traditional financial markets.

GBTC gets more competition

The Grayscale Bitcoin Trust (GBTC) is the primary way institutional investors gain access to Bitcoin. BlockFi’s Bitcoin Trust will compete with GBTC and offer investors an annual fee lower than GBTC’s fee rating. BlockFi’s Trust has approximately 685,500 shares outstanding, and there are 47.19 BTC per share.

BlockFi said, “The entry of the Trust into the market will provide investors with an alternative, more cost-effective entry point to the crypto market compared with similar existing products“.

Bitwise had also announced last week that it had filed to publicly trade its Bitcoin Fund on over-the-counter (OTC) desks and secondary markets. It will make the Bitcoin Fund available to more institutional investors and accredited individuals, granting them easy access to Bitcoin.

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