Grayscale to Launch Ethereum Classic Trust, Modeled After Bitcoin Investment Trust

Grayscale Investments is gearing up to launch a new investment product for Ethereum Classic (ETC) in the first quarter of this year. This will be the second investment product for the company; the first was the Bitcoin Investment Trust (BIT). caught up with Grayscale CEO and founder, Barry Silbert, to find out more about this new product.

Also read: Needham: Probability of Approval for a Bitcoin ETF ‘Very Low’ 

From BIT to ETC Trust

It has been over three years since Grayscale launched its first product, the BIT, on September 25, 2013, when the price of Bitcoin was roughly $127.7 and the market cap was only about $1.469 billion. Modeled on the SPDR® Gold Shares ETF, the Trust was Grayscale to Launch Ethereum Classic Trust, Modeled After Bitcoin Investment Trustcreated for investors looking for Bitcoin exposure. By the end of last year, it had $164.21 million in assets under management. The BIT has always been a private placement for accredited investors, trading over-the-counter. Now, the company, waiting to be listed on the NYSE Arca, has ceased all private offerings but continues to trade on OTCQX under the symbol GBTC.

As the BIT begins its journey away from being a private vehicle for only accredited investors, Grayscale is introducing another private investment vehicle called the ‘Ethereum (ETC) Investment Trust‘ (EIT). It allows investors to gain exposure to the price movements of Ethereum Classic without actually owning any ETC.

The ETC Investment Trust

According to Silbert, the new product is modeled after the BIT. “It will be an open-ended trust that holds ETC,” he described. As such, the Trust can issue and redeem shares at any time. Regarding the decision to launch this new Trust, Silbert told

We’re excited about the potential for Ethereum Classic and the underlying token (ETC) and believe there is demand from investors that would like to invest in a vehicle that enables them to participate in the price movement via a titled security.

ETC is the newer of the two Ethereum cryptocurrencies resulting from the July 2016 hard fork of the Ethereum blockchain. It is “a continuation of the original Ethereum blockchain – the classic version preserving untampered history; free from external interference and Grayscale to Launch Ethereum Classic Trust, Modeled After Bitcoin Investment Trustsubjective tampering of transactions,” its website describes. While ETC is the original protocol and has fewer modifications than the other Ethereum cryptocurrency (ETH), many of the developers and the community behind Ethereum have moved on to ETH.

ETC now trades on several exchanges including Bitfinex and Poloniex. At press time, the cryptocurrency is trading at US$1.40, approximately half of its all-time-high price from immediately after the split, with a market cap of around $124.6 million.

For Accredited Investors

Silbert confirmed that the EIT “will be launched as a private vehicle open to accredited investor.” The Grayscale website now describes its new product just as it did with the BIT, stating that:

The EIT is not registered with the SEC and the EIT’s shares are being offered in a private placement pursuant to Rule 506(c) under Regulation D.

The Securities Act of 1933 mandates all companies to register any securities with the SEC that they are offering or selling. However, there are some exemptions such as one Grayscale to Launch Ethereum Classic Trust, Modeled After Bitcoin Investment Trustprovided by Regulation D (Reg D) which allows a company to sell its securities to accredited investors without registering with the Commission by filing Form D, ‘Notice of Exempt Offering of Securities’.

There are many ways to qualify as an accredited investor. For example, anyone with a net worth exceeding $1 million or with an income of more than $200,000 in the two most recent years and reasonably expects the same for the current year, is qualified.

While there is much to do before launching the EIT, Silbert said the company is “Planning to launch in Q1,” adding that they are “waiting for the monetary policy (supply cap) to get finalized.”

What do you think of the ETC Trust? Let us know in the comments section below.

Images courtesy of Shutterstock, SEC, Grayscale, Ethereum Classic

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  • bitpop

    If Silbert can steal a non-profit’s name with straight face what is stopping him from stealing your money you give him???

  • Comte de Monte-Crypto

    etc it is based on china miners POW it is one the main reason why the push for that coin is happenning and Vitalik is on the way to go POS with ethereum…POW i dont think they can maintain that for a long term sill …so etc is on lets middle term for investement like in a 8 to 12 months range … it will climb on the chart and after that it may be different i invest in etc as a speculative coin … you cant buy nothin cant do nadda with that just see it go wild and crazy on the chart…ok happy trade…

  • Let’s say I constructed a bridge “modeled after” the Golden Gate. Everything is the same, except instead of finding nice solid rock bedrock on the sea floor, there is just mud, with thicker mud below. But I’ve completed the bridge, and it seems sturdy enough to us. Above the waterline my bridge looks identical to the Golden Gate.

    Would you drive across it? How about during a storm when there is a pretty good wind?

    Bitcoin is protected with 3.3 Eh/s (3,300,000 Th/s), or the equivalent of ~300,000 Antminer T9s. To get that amount of hashrate to perform a 51% attack (for the purpose of double spending) you’ld need to control about $350M worth of SHA256 ASIC hardware. But there isn’t $350M worth of hardware for sale and these are not used with any other coin, so the true cost of a 51% attack against bitcoin is even higher.

    Ethereum Classic hashrate is 1.0 Th/s (Scypt). This is about the equivalent of 40,000 high-end GPUs. To get the amount of hashrate to perform a 51% attack (for the purposeof double spending) you’ld need to control about $10M worth of GPU hardware. This exists in the supply chain (new GPUs), or could be redirected from other altcoins, where as many as 20X this number of CPUs are already in use for other altcoins. For instance, Ethereum has about $80M worth of the same GPUs. So if just 1/8th of Ethereum miners were to decide to temporarily re-assign their hardware, contributing the hashes to a 51% attack on Ethereum-Classic, that attack would be succesful. 1 out of 8!!! (Incidentally, ZCash also has about as many GPUs as Ethereum, so this attack might need participation from only 1 out of 16 ZCash miners plus 1 out of 16 Ethereum miners.

    Ethereum Classic is the suspension bridge built atop a mud base. It’s using Bitcoin’s stable proof-of-work design that was built for a different condition …. i.e., benefiting from having the vast majority of hashrate for its hardware class. )

    Anyone pushing $ETC as being a suitable alternative to $BTC needs to be questioned, and their motives understood.

  • vatten

    Don’t understand the logic of investing in an insecure cryptocurrency that have much less hash power than ETH, thus can be 51% attacked any time by the major ETH hash power.
    Imagine that you deposit 50K ETC to an exchange, exchange them to bitcoin and withdraw, then do a 51% attack to wipe out that transaction, this is totally feasible with today’s ETH hash power, thus any exchange supporting ETC trading would have to establish lots of transaction limit to protect them from this attack, thus make ETC extremely low liquidity

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