SEC

Wells Fargo Fined $3 Billion for 15 Years of Illegal Practices Affecting Millions of Customers

23/02/2020 by Idelto Editor

Wells Fargo, one of the largest U.S. financial services companies, has agreed to pay $3 billion to resolve the U.S. government’s investigations into fraudulent sales practices spanning over 15 years. The Wells Fargo fraud case involved the company forging customer signatures, moving money from millions of customer accounts to unauthorized accounts, and misusing customers’ sensitive personal information.

Also read: Regulatory Roundup – Trump’s Cryptocurrency Proposals, IRS Changes Rule, China Quarantines Cash

Illegal Practices for Over 15 Years

The U.S. Department of Justice (DOJ) announced Friday that Wells Fargo has agreed to pay $3 billion to resolve criminal and civil investigations into fraudulent sales practices involving millions of customer accounts. The practices occurred between 2002 and 2016 when the company pressured its employees to meet unrealistic sales goals. The DOJ stated:

Wells Fargo admitted that it collected millions of dollars in fees and interest to which the company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information, including customers’ means of identification.

“When a reputable institution like Wells Fargo caves to the pernicious forces of greed, and puts its own interests ahead of those of the customers it claims to serve, my office will not sit idle,” U.S. Attorney Andrew Murray for the Western District of North Carolina commented. “No institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings.”

Founded in 1852, the San Francisco-headquartered company provides banking, investment, and mortgage products and services, as well as consumer and commercial finance. It currently has $1.9 trillion in assets, 7,400 locations, more than 13,000 ATMs, and offices in 32 countries and territories. According to its website, the company is the largest by total deposits based on FDIC data in 2019, Fortune ranked it as the 6th largest based on total assets, and Forbes ranked it as the 10th largest public company in the world based on sales, profits, assets and market value.

The Wrongdoings

The DOJ explained that Wells Fargo admitted to using illegal sales practices which began in 1998 when the company increased focus on sales volume. From 2002 to 2016, Well Fargo’s Community Bank used what it called “gaming” strategies. Community Bank was the company’s largest business unit at the time, consistently generating more than half of the group’s revenue.

The gaming strategies “included forging customer signatures to open accounts without authorization, creating PINs to activate unauthorized debit cards, moving money from millions of customer accounts to unauthorized accounts in a practice known internally as ‘simulated funding,’ opening credit cards and bill pay products without authorization, altering customers’ true contact information to prevent customers from learning of unauthorized accounts and prevent Wells Fargo employees from reaching customers to conduct customer satisfaction surveys, and encouraging customers to open accounts they neither wanted or needed,” the DOJ described.

Community Bank’s top managers were aware of the unlawful, unethical and illegal gaming practices as early as 2002 but did not take sufficient action to prevent and reduce the incidence of such practices, the DOJ alleged, adding:

Community Bank senior leadership viewed negative sales quality and integrity as a necessary byproduct of the increased sales and as merely the cost of doing business.

The $3 Billion Settlement

The $3 billion payment resolves three matters for Wells Fargo. “The criminal investigation into false bank records and identity theft is being resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the three-year term of the agreement if it abides by certain conditions, including continuing to cooperate with further government investigations,” according to the DOJ. “Wells Fargo also entered a civil settlement agreement under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) based on Wells Fargo’s creation of false bank records.”

The SEC independently issued a press release Friday confirming that Wells Fargo had agreed to pay $500 million “for misleading investors about the success of its largest business unit.” The company violated the antifraud provisions of the Securities Exchange Act of 1934. The DOJ detailed:

The $3 billion payment resolves all three matters, and includes a $500 million civil penalty to be distributed by the SEC to investors.

Last week, crypto startup Elliptic announced that Wells Fargo Strategic Capital, an affiliate of Wells Fargo & Company, had joined its series B funding round. Elliptic is a provider of crypto risk management solutions. Its crypto transaction monitoring and investigations software enables clients to investigate and detect illicit activity in cryptocurrencies.

What do you think of the Wells Fargo fraud case and the $3 billion fine? Let us know in the comments section below.

Images courtesy of Shutterstock.

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Regulatory Roundup: Trump’s Cryptocurrency Proposals, IRS Changes Rule, China Quarantines Cash

18/02/2020 by Idelto Editor

In this roundup, we cover numerous cryptocurrency regulatory developments in the U.S., including President Trump’s crypto proposals, testimonies by the Federal Reserve chairman and the Treasury secretary, a crypto-friendly SEC proposal, and the IRS changing a crypto tax rule. We also cover China quarantining yuan bills, its central bank filing 84 digital currency patents, 40 German banks wanting to offer crypto services, several blockchain initiatives by the Indian government and more.

Also read: Regulatory Roundup – New US Crypto Tax Bill, Central Banks Join Forces on Digital Currencies

Trump’s Budget, Fed Chair’s Testimony, SEC Proposal

It has been a busy week for the U.S. government trying to regulate the crypto space. Perceiving cryptocurrency as a threat, President Donald Trump proposed a few measures to increase oversight of the industry in his new budget. He wants to return the Secret Service to the Treasury “to create new efficiencies in the investigation” of crimes, including those involving cryptocurrencies. He also proposed a budget of $127 million for the Financial Crimes Enforcement Network (FinCEN) “to combat emerging virtual currency and cybercrime threats.”

Also last week, Federal Reserve Chairman Jerome Powell testified before the House of Representatives Committee on Financial Services and Treasury Secretary Steven Mnuchin testified before the Senate Finance Committee. After answering questions about a digital dollar, Powell said “The idea of having a ledger where you know everybody’s payments is not something that would be, you know, particularly attractive in the United States context. It’s not a problem for China.” Mnuchin revealed that the Treasury will soon release new crypto regulations to increase transparency. Independently, the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, called bitcoin and other cryptocurrencies “a giant garbage dumpster.”

While the Department of Justice (DOJ) is criminalizing onchain privacy starting with mixers, the U.S. Office of the Director of National Intelligence is seeking researchers to determine how cryptocurrency could undermine the dollar as the world’s reserve currency. The director is the head of the Intelligence Community comprising 17 agencies, including the Federal Bureau of Investigation (FBI), the Central Intelligence Agency (CIA), the Department of Homeland Security (DHS), and the National Security Agency (NSA). In addition, the U.S. is auctioning over 4,040 seized bitcoins, currently worth approximately $40 million.

In the financial sector, token projects may see a sign of relief from the U.S. Securities and Exchange Commission (SEC) as crypto-friendly Commissioner Hester Peirce has unveiled her “Token Safe Harbor Proposal.” It is designed to give token projects a three-year grace period before deciding whether they involve the offering of a security. Meanwhile, the pro-crypto presidential candidate Andrew Yang has dropped out of the race to become the president of the United States.

IRS Backtracks on In-Game Tokens

Soon after the U.S. Internal Revenue Service (IRS) started accepting tax filings this year, it modified the text of a page on its website which details the tax treatment of cryptocurrency. The agency announced on Feb. 14: “The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language in order to lessen any confusion.”

The topic of confusion is in-game currencies. Previously, the IRS listed “bitcoin, ether, Roblox, and v-bucks” as examples of a convertible virtual currency. However, it quietly removed everything except bitcoin last week. The tax authority clarified:

Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.

China Quarantines Banknotes

China is currently combating the coronavirus which has killed more than 1,500 people and infected more than 66,000 people in the country. The government is now scrubbing and quarantining banknotes to stop the spread of the deadly virus by touching the bills. The central bank, the People’s Bank of China (PBOC), explained that banks use ultraviolet light or high temperatures to disinfect yuan bills. They are then sealed and stored for seven to 14 days, depending on the severity of the outbreak in a particular area, before being recirculated.

As for the impending launch of a central bank digital currency, the PBOC has reportedly filed 84 patents relating to its digital yuan. “Virtually all of these patent applications relate to integrating a system of digital currency into the existing banking infrastructure,” patent attorney Marc Kaufman commented.

German Banks Declare Intent to Offer Crypto services

More than 40 financial institutions in Germany have reportedly declared to the Federal Financial Supervisory Authority (BaFin) that they are interested in offering cryptocurrency custody services under the new German law. The law implementing the amendment to the Fourth EU Money Laundering Directive entered into force on Jan. 1.

The regulator told news.Bitcoin.com that financial services companies as of that date must submit their intent to apply for a license by March 31 and complete a license application by Nov. 30. The length of time it takes for an applicant to be granted a license depends on the individual case.

Furthermore, German banks are still struggling to cope with the negative interest rate policy maintained by the European Central Bank (ECB). At least 41 banks in the country are now charging their customers negative interest rates and the number is rising.

Australia Has 312 Registered Crypto Exchanges

The Australian Transaction Reports and Analysis Centre (AUSTRAC), the country’s financial intelligence agency and anti-money laundering regulator, has confirmed to news.Bitcoin.com that it has registered and enrolled 312 digital currency exchange providers.

“Since April 2018, AUSTRAC has regulated digital currency exchange providers to minimize the risk of criminals using them for money laundering, terrorism financing and cybercrime,” a spokesperson for the regulator said.

Indian Government Dives Deep Into Blockchain While All Await Supreme Court Verdict on RBI Ban

The government of India has been ramping up its efforts to integrate blockchain technology into its existing infrastructures. Last week, the country’s Chief Election Commissioner revealed that the Election Commission is working on a blockchain system for voting.

Earlier this month, the government’s premier policy think tank, Niti Aayog, released a report identifying key blockchain use cases in India. It followed a report entitled National Strategy on Blockchain, compiled by the National Institute for Smart Government as directed by the Ministry of Electronics and Information Technology (MeitY). It calls for the central bank, the Reserve Bank of India (RBI), to issue a digital rupee. Moreover, the Telangana state government has launched a blockchain accelerator in partnership with Tech Mahindra and IBC Media.

While the Indian government has not made a decision on whether to regulate or ban cryptocurrencies in the country, Prime Minister Narendra Modi recently awarded a young entrepreneur for her work on a cryptocurrency app. Additionally, the supreme court has yet to announce its verdict on whether to lift the banking restriction imposed on crypto businesses by the RBI. The court wrapped up hearing the arguments against the ban several weeks ago and has reserved judgment on the case.

Switzerland to Lower User-Verification Threshold

The Swiss Financial Market Supervisory Authority (FINMA) has published a proposal for a follow-up crypto regulation. It proposed amending the client identification threshold values in its Anti-Money Laundering Ordinance from CHF 5,000 ($5,092) to CHF 1,000 for crypto exchange transactions. FINMA says it’s “acknowledging the heightened money-laundering risks in this area.” The regulator is holding a consultation on this follow-up regulation until April 9.

What do you think of the crypto regulatory developments covered in this roundup? Let us know in the comments section below.

Images courtesy of Shutterstock and the Financial Times.

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XRP Still Third Largest Crypto by Market Cap After Founder Dumps 1 Billion Coins

10/02/2020 by Idelto Editor

Crypto traders and speculators have been discussing the digital currency XRP (ripple) lately because the price has been stagnant compared to other digital assets. Some venture capitalists and analysts plan to short XRP, while other speculators believe the crypto is poised for a price jump in the future. Additionally, crypto enthusiasts have been discussing Ripple cofounder Jed McCaleb selling 1 billion XRP.

Also read: Bitcoin, Tesla Stock, Tron: How Warren Buffett Got His First Bitcoin

A Closer Look at XRP

The digital currency XRP and the Ripple project have always been a controversial topic among cryptocurrency supporters. Lots of people love and advocate for XRP, while others believe the network is pure garbage. According to the project’s creators, the Ripple network is a real-time gross settlement system that has a native token called XRP. The project was launched in 2012 and XRP is one of the oldest digital currencies in comparison to networks like BTC.

Our newsdesk decided to look at data points to see how the digital asset weighs up against BTC’s market and network performance. News.Bitcoin.com analyzed data from onchain, the economics, development and the XRP project’s prominence on social media. Further, we took a look at today’s opinions from crypto influencers and analysts speculating on XRP digital currency markets and the network’s performance. Long ago, XRP was called “ripple” but most people refer to the cryptocurrency these days as simply XRP. When the digital currency was launched, developers created 100 billion units but at press time there’s less than half that number in circulation (43.6 billion).

XRP is trading for $0.27 per coin today and there’s 43,698,224,662 XRP in circulation. Tallying up each coin’s worth plus the number of XRP in circulation makes XRP the third largest blockchain by market capitalization. According to Messari.io, XRP’s trade volume this week was between $325-660 million per day, but the data site claims “real volume” during the last 24 hours is around $121 million. XRP is down 92% from its $3.84 per unit all-time high (ATH). During the last year against USD, the currency is down 11% and against BTC, XRP is down 66% over the same timeframe. As far as volume by currency is concerned, Cryptocompare indicates that tether (USDT) is the top coin swapped with XRP, capturing 46% of all trades. This is followed by BTC (17.68%), USD (8.77%), KRW (6.96%), ETH (3.60%), JPY (3.08%), and EUR (1.80%).

Crypto Analysts and Traders Wonder if XRP Prices Will Spike or Remain Stagnant

Some traders believe XRP is poised for a spike in value, while other analysts think people should avoid XRP like the plague. For instance, a recent article from Forbes discussing the cofounders of Multicoin Capital is titled: “Avoid XRP Says Multicoin; Bitcoin’s Big Rally.” Within the editorial, it notes that Multicoin Capital’s Kyle Samani and Tushar Jain have been shorting XRP. Venture capitalist and Galaxy Digital CEO Mike Novogratz discussed XRP “underperforming” in a series of tweets on February 6.

“XRP and many other cryptos, like ETH are still in the ‘proving’ phase. They aren’t going to succeed as solely a store of value as BTC has taken that lane,” Novogratz tweeted last Tuesday.

$XRP – Once in a while you gotta stop and look around…. you could miss it

Spring it! pic.twitter.com/45VcIwt7xZ

— TraderXO (@TraderX0X0) February 1, 2020

Meanwhile, a recently published report by Steve Muchoki tells a different story and says that the “XRP price can reach $0.60 in the near future as XRP’s popularity is growing.” “Ripple’s XRP price is showing all the signs of reaching $0.60 in the near future, as it is supported by different technical and fundamental aspects,” Muchoki wrote on Monday. The article mentioned a recent Twitter poll about which altcoins will last the test of time and XRP came out winning. The writer also detailed that Ripple might go public in 2020 with an initial public offering and highlighted that “the total supply is double the circulating supply.” Despite Muchoki’s opinion, many crypto market observers have noticed Ripple cofounder Jed McCaleb has allegedly sold a good portion of his XRP holdings.

McCaleb Sells a Billion XRP

A report written by blockchain analytics provider Whale Alert estimates that McCaleb has sold a lot of XRP since 2014. Whale Alert notes that McCaleb acquired roughly 9 billion XRP since Ripple’s founding days and in September 2019 Whale Alert reported on the transfer of 100 million XRP from Ripple to McCaleb’s wallet. The blockchain analytics researchers managed to find around 8 billion of McCaleb’s alleged stash of XRP.

“In total, we managed to track the sales of 1.05 billion XRP (almost exclusively through Bitstamp) between 2014 and 2019,” Whale Alert’s report highlights. “At an average sale price of 0.129 cents per XRP, the total sale amount was $135 million USD.”

As far as transactions per day are concerned, XRP has been outpacing BTC in that department. Coin Metrics shows that BTC averages around 300,000 transactions (txns) every 24 hours, but XRP is pushing 800,000 to 900,000 txns a day and has recently seen upwards of 2 million per day.

XRP has around 209,000 Reddit subscribers and 945,000 Twitter followers, giving the coin a 21% social benchmark according to Coindesk crypto data. As far as development, XRP has 482 Github watchers and 81 Github contributors which is significantly smaller than other coin contributor counts. The XRP codebase has been forked over 1,000 times but the most prominent fork is the Stellar (XLM) network. As far as merged pull requests on Github are concerned, XRP has seen over 2,400 while BTC merged pull requests stand at 12,200.

XRP Still Faces a Number of Unknowns

XRP believers think Ripple’s partnerships with financial incumbents will help XRP succeed. And XRP proponents also wholeheartedly believe XRP will dominate other cryptos like BTC in the future and help decentralize fiat settlement and remittances worldwide. At the same time, a number of crypto enthusiasts think XRP is very centralized and the number of coins held by early investors and founders is scary. Others believe XRP is also an unregistered security and the crypto could have more issues with government regulators about this concern.

Crypto advocates have been concerned because regulators like the U.S. Securities and Exchange Commission (SEC) could retroactively penalize the project’s creators. Despite these fears, most XRP supporters still think that XRP will continue to remain one of the top digital assets as far as valuation and performance are concerned. So far XRP has remained a silent behemoth, consistently occupying a top three spot by market cap, despite concerted attempts to dislodge it.

What do you think about XRP? What do you think about the consolidation and stagnant price action in regard to XRP markets? Do you think XRP is poised for a breakout? Let us know what you think about this subject in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Price articles and market updates are intended for informational purposes only and should not be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.” Cryptocurrency prices referenced in this article were recorded at 2:30 p.m. on February 10, 2020.

Image credits: Shutterstock, Coin Metrics, Markets.Bitcoin.com, Coinlib.io, Coindesk, Fair Use, and Pixabay.

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”Decentralized Networks a Powerful Phenomenon” – Why the SEC Commissioner Proposes Time-Limited Grace Period for Tokens

09/02/2020 by Idelto Editor

Crypto-Friendly SEC Commissioner Proposes 3-Year Grace Period for Tokens

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has formally proposed a grace period of three years for tokens. Project developers would be exempt from the federal securities laws during that time, provided that they meet certain conditions. After that, they must determine whether their token transactions involve the offer or sale of a security.

Also read: Bitcoin, Tesla Stock, Tron: How Warren Buffett Got His First Bitcoin

Proposed ‘Time-Limited Exemption for Tokens’

SEC Commissioner Hester Peirce announced her “Token Safe Harbor Proposal” on Thursday, calling it “a proposal to fill the gap between regulation and decentralization.” Her “Proposed Securities Act Rule 195 — Time-limited exemption for tokens” seeks to give issuers a three-year exemption from federal securities laws, allowing them to develop functional or decentralized networks.

“I find decentralized networks such a powerful phenomenon, and one that will allow society to benefit from the talents of people who — because of societal or geographic barriers — have heretofore been excluded,” the commissioner opined. Peirce is often known within the crypto community as “crypto mom,” having repeatedly advocated for cryptocurrency. She firmly believes that the SEC should have already approved bitcoin exchange-traded funds (ETFs). She has been an SEC commissioner since 2018 and her term expires this year.

”Decentralized Networks a Powerful Phenomenon” – Why the SEC Commissioner Proposes Time-Limited Grace Period for Tokens — SEC Commissioner Hester Peirce

While no registered token offering has been conducted in the U.S., there are currently some exemptions available to project developers, such as those provided by Regulation D and Regulation A. However, Peirce pointed out that the two routes are costly and prohibitive, making it difficult for projects’ networks to take off.

Expressing the need for her proposal, the commissioner said that many crypto entrepreneurs are trying to build decentralized networks and need to get their tokens into the hands of other people. “These efforts can be stymied by concerns that such efforts may fall within the ambit of federal securities laws,” she emphasized. “The fear of running afoul of the securities laws is real. Given the SEC’s enforcement activity in this area, these fears are not unfounded.”

3-Year Grace Period

Commissioner Peirce explained that her proposed safe harbor “provides network entrepreneurs sufficient time to build their networks before having to measure themselves against a decentralization or functionality yardstick,” elaborating:

The safe harbor would provide network developers with a three-year grace period within which they could facilitate participation in and the development of a functional or decentralized network, exempted from the registration provisions of the federal securities laws, so long as the conditions are met.

Her proposal also “protects token purchasers by requiring disclosures tailored to their needs, preserving the application of the antifraud provisions of the securities laws, and giving them an ability to participate in networks of interest to them,” she claims.

The offer and sale of tokens would be exempt from the provisions of the Securities Act of 1933, except the antifraud provisions, Peirce detailed. The tokens would also be exempt from registration under the Securities Exchange Act of 1934 and persons engaged in certain token transactions from the definitions of “exchange,” “broker,” and “dealer” under the 1934 Act. The development team must meet certain conditions, including information disclosure to qualify for the exemptions.

When the Grace Period Is Up

The initial development team must intend for the project to reach network maturity within three years. The relief provided “will expire three years from the date of the first token sold in reliance upon the safe harbor,” the proposal states. “Upon the conclusion of the three-year period, the initial development team must determine whether token transactions involve the offer or sale of a security.”

Peirce described that token transactions would not be securities “if the network has matured into a decentralized or functioning network on which the token is in active use for the exchange of goods or services.” She believes that it would be easier for these projects to pass the SEC’s Howey test for securities at the end of three years, adding:

Once the network cannot be controlled or unilaterally changed by any single person, entity, or group of persons or entities under common control, the token that operates on that network will not look like a security.

“Even for a network that remains centralized,” the commissioner continued. “Once the tokens are actually in use to buy and sell the services for which they were intended, the securities laws will be clearly inapplicable.”

What do you think of Commissioner Peirce’s proposal? Let us know in the comments section below.

Images courtesy of Shutterstock, Reuters, and Commissioner Hester Peirce.

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Bitcoin Trust GBTC Shares Spike Despite 30% Premium

06/02/2020 by Idelto Editor

Bitcoin and cryptocurrency prices have seen significant gains as the entire cryptoconomy is up more than 40% since mid-December. Grayscale’s Bitcoin Trust (GBTC) has also seen an uptick and shares have climbed 9% this week. The news follows the asset manager’s recent registration as a reporting company with the Securities and Exchange Commission (SEC) and the private placement of its shares. In the last three weeks, GBTC’s price has jumped more than 44%, mimicking BTC’s price patterns despite having a significant premium.

Also Read: IOTA, EOS, XLM, ADA – 4 ‘Bitcoin Contenders’ With Zero Use Cases and Barely Any Infrastructure

Demand for Grayscale Grows

The oldest running regulated Bitcoin Investment Trust (OTCQX: GBTC) managed by Grayscale was established in 2013 and is sold to accredited investors. GBTC is considered the first publicly quoted security that derives its value from BTC and the value of GBTC shares have been rising alongside BTC this week. GBTC shares touched a low of $7.98 on January 2 and the price has jumped 44% to $11.52 on February 5. Most of the time, GBTC is trading at a premium which is 20-30% higher than spot market prices.

Bitcoin Trust GBTC Shares Spike Despite 30% Premium — GBTC or the Bitcoin Investment Trust is Grayscale’s first crypto fund but the company now manages 10 crypto funds in 2020.

The trust’s shares really started popping on Monday, January 7. At the time, market analysts cited geopolitical turmoil was priming safe-haven assets like precious metals and cryptocurrencies. Moreover, speculators believe bitcoin’s current rising prices are reflective of the upcoming BTC halving that’s going to slash block rewards in May 2020. Financial columnist Joe Tenebruso noted when GBTC’s shares spiked in January that Grayscale’s investment trust is “an imperfect proxy for the price of bitcoin.”

“The trust is currently trading at a nearly 30% premium to the value of the underlying cryptocurrency that it holds,” said Tenebruso at the time. “However, unless a bitcoin exchange-traded fund is approved by regulators, investors who do not wish to deal with the security and other operational challenges that come with holding actual bitcoin will probably continue to use Grayscale Bitcoin Trust as a means to gain exposure to the cryptocurrency.”

The GBTC premium follows Grayscale’s resumption of the private placement of its shares. Private placement buyers wait for one year and they can choose to sell their GBTC shares after the holding period. Private placement is offered once in a while throughout the year to accredited investors. GBTC’s private placement concept gives investors access to unique liquidity opportunities. The reason for the wait time is because the shares are not registered under the Securities Act and investors are subject to the one-year holding period. “The Trust’s investment objective is for the value of its shares (based on Bitcoin per share) to reflect the price performance of Bitcoin, less fees and expenses,” Grayscale disclosed. The fund management company added:

The trust is solely and passively invested in bitcoin and was created for investors seeking exposure to bitcoin through a traditional investment vehicle. As of January 10, 2020, the trust has more than $2.06 billion in assets under management (AUM) and each share of the trust represents 0.00096884 Bitcoin.

After opening up private placement options, Grayscale obtained the status of a reporting company from the U.S. Securities and Exchange Commission (SEC) at the end of January 2020. The fund management company registered with the SEC in November and the firm manages 10 different cryptocurrency investment products. “As many institutions restrict investments in instruments that are not registered with the SEC, a broader set of investors may now begin to consider the trust accordingly,” Grayscale explained on January 21.

GBTC typically mimics BTC price movements on spot exchanges. However, GBTC often has a higher premium than the global spot market price for BTC.

The managing director at Grayscale, Michael Sonnenshein, said the trust’s sponsor sought out the reporting company designation and looks forward to working with the U.S. regulator. “Grayscale Bitcoin Trust becoming an SEC reporting company marks an incredible milestone for the trust, Grayscale as an asset manager, and the digital currency industry as a whole,” Sonnenshein stressed.

“[The] announcement should signal to investors that our regulators are willing to engage with our products and our space as a whole. Even though it will require more rigorous reporting standards, it is a new level of transparency and reporting that we believe investors deserve,” Grayscale’s managing director further stated.

Because the U.S. Securities and Exchange Commission (SEC) has yet to approve a regulated bitcoin exchange-traded fund (ETF), some people believe this is why GBTC often sells for a much higher premium.

The U.S. regulator has yet to approve an ETF, and because of this wait, GBTC’s shares are likely benefiting. Analysts like Tenebruso believe GBTC will continue to “mimic the price movements of bitcoin in the days and weeks ahead.” That’s been the case so far and despite crypto spot prices being lower, the regulated shares are still being acquired for a much higher premium.

What do you think about GBTC’s 20-30% premium and 44% climb over the last three weeks? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, OTCQX: GBTC, Grayscale, Pixabay, Fair Use, and Wiki Commons.

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