Grayscale, the company that created the tradable Bitcoin Investment Trust (GBTC), has announced the establishment of four new cryptocurrency-related investment funds.
Bitcoin Cash Investment Trust, Ethereum Investment Trust, Litecoin Investment Trust, and XRP Investment Trust are the names of the funds. They cover the virtual currencies Bitcoin Cash, Ether, Litecoin, and Ripple, in that order. (Also see: Bitcoin Hedge Fund Launched by Two Former BlackRock Bond Specialists.)
The investment management firm intends to release additional such products later this year. Its four new crypto funds are run as trusts that adhere to a set of rules.
Grayscale’s approach remains focused on the liquidity of cryptocurrencies. Each quarter, digital currencies are assessed to see whether they have fallen below the 70% objective of the whole market value in digital currencies. This provides an indicator of their liquidity.
Required One-Year Holding Period
Because the funds operate as trusts, only eligible authorized investors residing in the United States are permitted to invest in them. There is a one-year holding period before the investor is free to leave the funds.
“Digital currencies are not like equities and bonds,” Michael Sonnenshein, managing director at Grayscale Investments, told CNBC. People must have particular technical skills in order to manage them.”
Grayscale, which manages $2.1 billion in assets across eight products, launched the popular Bitcoin Investment Trust (GBTC) in 2013. It offers a handy way for participants to participate in and trade on the price fluctuations of the famous bitcoin cryptocurrency without holding a direct stake in the virtual currency. (For further information, read 5 Ways to Short Bitcoin.)
The four new trusts join the company’s Digital Large Cap Vehicle, a multi-crypto investment fund established last month. While the Digital Large Cap Fund invests in a basket of cryptocurrencies, the four trusts will concentrate on particular cryptocurrencies.
‘Digital Currencies Are Here to Stay’
Grayscale will be able to grow its client base internationally with the introduction of these new funds and more to come. For example, Ripple is gaining pace in Asian countries such as Japan and China, although governmental crackdowns in a few areas have prompted concerns about the legitimacy of ordinary investors trading in cryptocurrencies. Accredited investors may now easily get exposure to multiple cryptocurrencies. (For additional information, read Is Bitcoin Banned in China?)
“We believe that digital currencies have not just arrived, but are here to stay,” Sonnenshein added. “As a result, we are dedicated to offering structures that allow investors to engage in this attractive asset class.” (For more information, read Billionaire Marc Andreessen Backs Cryptocurrency Hedge Fund.)
Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and neither Investopedia nor the author suggest that you do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns no cryptocurrencies as of the day this post was published.
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