Blockchain technology company SolidX Partners has announced that it has filed a registration statement with the Securities and Exchange Commission (SEC) for the proposed launch of the SolidX Bitcoin Trust, a new Exchange-Traded Fund (ETF) for traditional investors.
According to the company's website, SolidX Partners provides blockchain-based software solutions relating to the indelible recording of digital records, transfer of assets, and identity. “SolidX also has a capital markets arm that has filed a FORM S-1 registration statement for a proposed launch of a bitcoin exchange traded fund,” reads a recently added paragraph.
The SolidX press release reveals that the ETF will list on NYSE Arca, the New York Stock Exchange (NYSE) market specialized in Exchange-Traded Products (ETPs), under the ticker symbol XBTC. The Trust, not actively managed, will provide shareholders with exposure to the daily change in the U.S. dollar price of Bitcoin, before expenses and liabilities of the Trust, as measured by the TradeBlock XBX Index.
The SolidX SEC filing has been covered by the financial press, including The Wall Street Journal and Reuters, which indicates the growing interest in Bitcoin among traditional investors who want to bet on (or short) the price of Bitcoin without going through the hassle of buying or selling the digital currency itself.
“The SolidX Bitcoin [Trust] will issue SolidX Bitcoin [Shares], which represent units of fractional undivided beneficial interest in and ownership of the Trust,” states the filing. “The Trust’s assets will consist of bitcoin, an asset that can be transferred among parties via the Internet, but without the use of a central administrator or clearing agency. The Trust will occasionally hold cash for short periods in connection with the purchase and sale of bitcoin, and to pay Trust expenses. The Shares are issued by the Trust only in one or more blocks of 10,000 Shares, called a ‘Basket,’ principally in exchange for cash. The Trust will issue and redeem Shares in Baskets to certain registered [Authorized Participants]. Shares will be offered to the public from time to time at prices that will reflect, among other things, the price of bitcoin and the trading price of the Shares on NYSE Arca at the time of the offer.”
NYSE Arca trades more than 8,000 exchange-listed securities and is ranked first in the listing and trading of ETPs, such as ETFs, exchange-traded notes (ETNs) and exchange-traded vehicles (ETVs), According to NYSE Arca, ETPs are one of the fastest growing investment products in the world, combining the simplicity of stocks with the diversified risk of mutual funds.
Jerry Brito, executive director of Coin Center, has analyzed the differences between the SolidX Bitcoin Trust and the long anticipated Winklevoss Bitcoin Trust. The Winklevoss twins recently filed with the SEC to switch the listing of their proposed ETF Winklevoss Bitcoin Trust to Bats Global Markets from Nasdaq, CNBCreported last month.
Brito notes that the most interesting contrast between the two proposed funds is what happens if their bitcoins are lost or stolen.
“The Trust will not insure its bitcoin,” states the Winklevoss filing. On the contrary, SolidX has secured insurance for its bitcoin holdings.
“The Trust will maintain crime, excess crime and excess vault risk insurance coverage underwritten by various insurance carriers,” states the SolidX filing. “The purpose of the insurance is to protect shareholders against loss or theft of the Trust’s bitcoin. The insurance will cover loss of bitcoin by, among other things, theft, destruction, bitcoin in transit, computer fraud (i.e., hacking attack) and other loss of the private keys that are necessary to access the bitcoin held by the Trust.” The insurance is explained in detail in the section “The Trust’s Bitcoin Insurance” of the filing.
“Investors are understandably interested in bitcoin,” says a Quartz article, noting that Bitcoin Tracker One, a trust listed on the Nasdaq Stockholm exchange, is up 66 percent since April 1. Greyscale Bitcoin Trust, which trades on the OTC markets and was created by Digital Currency Group CEO Barry Silbert, is up 120 percent over the same period.
“Since those are on smaller exchanges, they are more difficult for investors to access,” concludes Quartz. In fact, it’s to be expected that availability on a major stock exchange like the NYSE will open XBTC to more investors, and boost Bitcoin’s appeal to traditional investors.