It was announced today by the Board of Directors of XBT Provider AB, an issuer of bitcoin Exchange Traded Notes (ETNs) which trade on Nasdaq Stockholm that the investment company would distribute the appropriate amount of Bitcoin Cash (BCH) to ETN holders from the August 1st fork event.
This decision came in accordance with its previously announced policy where there would be a 3 month “observation period” in which XBT would evaluate along with the guarantor of the notes how the value created from the Bitcoin Cash fork may be distributed.
The XBT board reiterates that investors in the bitcoin ETNs are not holders of bitcoin. As disclosed, the notes synthetically track the price of bitcoin (and not any alternative coin which results from a forking, split or any other event and which shares a common transaction history prior to the fork). However, a hedging arrangement exists between XBT and group companies of the guarantor of the notes, Global Advisors (Jersey) Limited, recently merged together as part of the newly formed CoinShares group. Those group companies of the guarantor hold bitcoin to support XBT’s issued notes.
Notwithstanding, XBT and the guarantor have no legal requirement to distribute any value created from a fork (including the BCH fork) (other than any enhanced performance of the coin which remains as ‘bitcoin’). Thus in good faith, XBT wishes to pass such value created (or as much thereof as is practicable) through to the holders of its bitcoin ETNs at the time of the fork.
Following detailed discussions during the “observation period” with various settlement and clearing third-party service providers and key structured products advisors, the board of XBT has concluded that the most appropriate action to take to give effect to the aforementioned policy position is to implement a cash distribution plan for those investors holding bitcoin ETN notes at the opening of trading on August 1st.
To prepare for the implementation of this distribution plan, the guarantor and its affiliate companies have been divesting themselves of BCH, whenever it has been possible using existing liquidity pools and exchanges that offered BCH to their venues. The proceeds yielded therefrom, less the costs of implementing and administering the distribution plan will be available for remittance for the benefit of the holders of XBT’s bitcoin ETNs at the opening of trading on August 1st. Individuals and/or brokers may be required to provide additional identification / ‘know your customer’ information in order to be able to receive a distribution.
The policy of XBT Provider, as stated previously by the company, remains to consider the appropriate action to take in light of each fork event on a case-by-case basis. What is appropriate in the context of one fork may not be advisable in the context of a different fork.
Accordingly, the cash distribution plan to be implemented in connection with the Bitcoin Cash (BCH) fork, as referred to herein, should not be regarded as setting a definitive precedent for the action which XBT Provider may take on the occurrence of any future fork.
Discussion about this post