SecondMarket, which runs an online marketplace for illiquid assets such as closely held community bank shares, has created a private investment vehicle to invest in bitcoins, the decentralized virtual currency.

The Bitcoin Investment Trust is designed to let individual and institutional investors get into the Bitcoin ecosystem without the challenges associated with buying and holding bitcoins directly. SecondMarket has put more than $2 million worth of bitcoins in the trust and plans to raise additional money from investors via the New York firm’s platform, which is open only to accredited investors.

The trust is billed as the first U.S.-based private investment vehicle to exclusively invest in bitcoins. It will vie for attention, and possibly for capital, with a publicly listed, exchange-tradedfund being set up by the Winklevoss twins (of Facebook fame) to invest in this asset class.

“We incubated the BIT to alleviate the problems of direct bitcoin ownership, including having to wire money to newly-established and potentially unregulated entities around the world,” says Barry Silbert, SecondMarket’s founder and chief executive. “SecondMarket has a track record of making alternative investments accessible to a broader group of qualified investors.” 

Investors in the BIT will have the ability to cash out shares through periodic auctions on SecondMarket’s platform.

“We believe that bitcoin may have significant upside given the size and scope of the industries that potentially are impacted by bitcoin,” Silbert says. “However, bitcoin also faces regulatory uncertainty and widespread adoption issues that make investing in bitcoin a highly risky endeavor.”

International remittance, microtransactions and charitable giving are sectors that stand to be beneficially disrupted by the Bitcoin payment network.

Bitcoin has faced an uphill battle with regulatory issues put on exchangers and administrators by the Financial Crimes Enforcement Network’s March virtual currency guidance. The Bitcoin community and federal government have begun discussing next steps. The Bitcoin Foundation, a trade group, met with federal regulators and law enforcement officers in Washington last month.

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