SecondMarket Inc., where stock of private companies such as Facebook Inc. traded before they went public, has started the first U.S. fund investing solely in the Bitcoin virtual currency.
Shares of Bitcoin Investment Trust are being offered exclusively through SecondMarket, which also provided a $2 million investment, the trading platform said in a statement today.
The trust will allow “sophisticated investors” to buy shares at a set price without having to transact Bitcoin in a fragmented and highly illiquid market with unregulated entities, and safely store the virtual money, according to the trust's website. Since its creation in 2009, Bitcoin's market value has risen to $1.5 billion, 24 million transactions have been conducted, and more than 10,000 vendors now accept the virtual money, according to the statement.
“We incubated the BIT to alleviate the problems of direct Bitcoin ownership, including having to wire money to newly established and potentially unregulated entities around the world,” SecondMarket chief executive Barry Silbert said in the statement.
The trust requires a minimum investment of $25,000, the website showed. Investors who buy shares in the trust can gain liquidity through auctions on SecondMarket starting in 2014, according to the statement. The net asset value of the trust will be calculated daily and made publicly available, it said.
Bitcoin was created by a person or group known as Satoshi Nakamoto and can be used to buy and sell a variety of items ranging from cupcakes to electronics to illegal narcotics.
The currency is derived through a system called mining, in which connected computers process Bitcoin transactions and earn their owners Bitcoin as a reward. The potential difficulty in tracking illegal transactions has drawn regulatory attention.
The trust will be audited by Ernst & Young LLP, according to the statement.
SecondMarket is backed by investors including FirstMark Capital, Social+Capital Partnership, Li Ka-shing Foundation and Temasek Holdings PTE, the statement said.