Unregulated Sources of Bitcoins

The “Bitcoin Investment Trust” recently started by Second Market has grown by 155 percent over the last 30 days.

I recommend looking at the Investor Presentation found here. On page 8 it lists several advantages of buying bitcoins over the trust (these advantages are the reason they are charging fees).

The first one reads:

Direct Bitcoin Ownership Issues: Unregulated Sources of Bitcoin. Buying Bitcoin in volume involves dealing with potentially unregulated and newly established entities around the world.

BIT Solution: The BIT is marketed and distributed by SecondMarket Inc., a US-based FINRA-registered broker-dealer, in a manner that we believe complies with all relevant federal and state regulations.

I note approvingly that (in contrast to MtGox) Second Market displays their physical location in an exemplary way on their home page. They would not be caught with having only a misspelled, outdated address hidden in the “Terms of Use”.

I guess they would run into some problems with the Financial Industry Regulatory Authority (FINRA) if they did not disclose these basics in a proper way.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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