NEW YORK, July 28, 2017 /PRNewswire/ -- Grayscale Investments, LLC, the sponsor (the "Sponsor") of the Bitcoin Investment Trust (the "Trust")(OTCQX:GBTC), announced today plans to respond to the possible fork of the Bitcoin blockchain that would result in the creation of a new digital currency in addition to Bitcoin called Bitcoin Cash.
There is a chance that on or shortly after August 1, 2017, a group of miners and users will adopt a proposed modification to the Bitcoin software that would result in the creation of a digital currency known as Bitcoin Cash. As there is no official developer or group of developers that formally controls the Bitcoin Network, any individual can make modifications to the software, including those making it incompatible with the existing Bitcoin Network, and propose that miners and users adopt the changes. If a proposed modification is not accepted by a vast majority of miners and users, but is nonetheless accepted by a substantial population of participants in the Bitcoin Network, a "fork" in the Blockchain could develop, resulting in two separate Bitcoin Networks. If a permanent fork occurs, Bitcoin could evolve into two separate digital currencies.
The Sponsor currently expects to cause the Trust to liquidate any Bitcoin Cash associated with the Bitcoin held by the Trust and to cause the proceeds of such liquidation to be distributed on a pro rata basis to holders of units of the Trust. It is expected that any such distribution would be made only after allowing time for evaluation of the market for Bitcoin Cash and consideration of the manner in which to liquidate such Bitcoin Cash, which may be months after the fork occurs. As part of the evaluation of the market for Bitcoin Cash, the Sponsor expects to consider, among other factors, whether there are any appropriately regulated exchanges that have listed Bitcoin Cash. In addition, such distribution, if and when made, would be to owners who held Trust units on a specified record date, which is anticipated to be the day the fork occurs. The amount of any distribution will be net of expenses of the Sponsor and the Trust, including costs associated with liquidation and distribution.
Because of the uncertainty regarding whether Bitcoin Cash will be created at all and the timing and method of the creation of Bitcoin Cash and the development of trading markets for Bitcoin Cash, if any, the Sponsor can offer no assurance as to whether or when proceeds from the liquidation of any Bitcoin Cash associated with the Bitcoin held by the Trust will be distributed. Any such distribution may be delayed or prevented due to technical, regulatory, commercial or other considerations, including security concerns. In addition, the value of Bitcoin Cash may be such that the Sponsor determines that a distribution is impracticable given the costs of liquidation and distribution. The Sponsor plans to cause any liquidation of Bitcoin Cash and distribution of the proceeds therefrom to be effected in a manner intended to permit the Trust to continue to be treated as a grantor trust for U.S. federal income tax purposes, and expects that any Bitcoin Cash will be segregated from the Trust before its liquidation. Any action to be taken to respond to the creation of Bitcoin Cash will be subject to obtaining any necessary amendments to, or consents under, the trust agreement governing the Trust.
The Sponsor continues to evaluate all options open to the Trust with respect to Bitcoin Cash, and these plans are subject to change.
About Grayscale Investments, LLC
Founded in 2013, Grayscale Investments, LLC is a wholly-owned subsidiary of Digital Currency Group, Inc., which builds and supports bitcoin and blockchain companies by leveraging its insights, network, and access to capital. A trusted authority on digital currency investing, Grayscale Investments, LLC provides market insight and investment exposure to the developing digital currency asset class.
Grayscale Investments, LLC is headquartered in New York City.
SOURCE Grayscale Investments, LLC