BlockFi unveils the BlockFi Bitcoin Trust, offers a new way to invest in Bitcoin

By Pavithra R

BlockFi, building a bridge between traditional finance and blockchain technology to bring financial empowerment to clients globally, has announced the launch of the BlockFi Bitcoin Trust, an investment vehicle for investors seeking access to Bitcoin.

The introduction of the Trust in the market is expected to provide investors with an alternative and cost-effective entry point to the crypto market than similar existing products. 

Investment trusts are among the most popular methods for major institutions to invest in BTC. The Trust will issue shares via private placements, and the investment objective of the Trust is for the value of the shares to reflect the value of BTC held by the Trust less the Trust’s expenses and other liabilities.

BlockFi is planning to make available the Trust shares to global institutions and other qualified investors soon. Later, this eligibility is to be expanded to include accredited individual investors in the U.S.

“Given the level of institutional activity in recent months and demand for new, professional-grade investment vehicles, the timing of BlockFi Bitcoin Trust is ideal. As we work to broaden the availability of this vehicle to retail brokerages, we expect this product will facilitate greater investments in digital assets – at the core of BlockFi’s mission in bridging crypto with traditional finance,” said Zac Prince, Founder & CEO of BlockFi.

Initial subscribers to the Trust are expected to include BlockFi and select institutional investors, using BTC to subscribe. Upon the expiration of an initial lockup, shares may become available for secondary investment on a wide range of recognized brokerage platforms.

“We believe a trust structure for this product is beneficial for investors and will play an important role in improving access in this nascent market. The BlockFi Bitcoin Trust can more easily meet rapidly growing demands from the public to invest in digital assets, and our decision to custody the Trust’s holdings with Fidelity Digital Assets will help give shareholders peace-of-mind in the security of their investments,” said Yevgeniy Feldman, Vice President for Institutional Services at BlockFi. 

As a Trust sponsor, BlockFi Management LLC, a wholly-owned subsidiary of BlockFi, will charge a sponsor fee of 1.75%. BTC held in the Trust will be custodied by Fidelity Digital Assets Services through an enterprise-grade custody solution purpose-built for institutional investments. Davis Polk & Wardwell LLP is the legal counsel to BlockFi in connection with the Trust, with Coin Metrics providing index and pricing data and Grant Thornton serving as financial statement auditor.  

Founded in 2017, BlockFi provides wealth management products which crypto investors need, all powered by blockchain technology. The FinTech is backed by investors including Galaxy Digital, Susquehanna, Akuna Capital, Fidelity, Recruit Strategic Partners, Coinbase Ventures, CMT Digital, SoFi, ​ConsenSys Ventures, and Morgan Creek Digital.