In a bid to cloak the virtual currency Bitcoin with some respectability, a new investment fund is due to launch early in 2014.
Bitcoin Investment Trust is an open-ended fund specifically designed to trade futures in the much-maligned currency.
US government officials have slammed the virtual money has a tool for drug dealers, money laundering and terrorists as no central bank has any control of the Bitcoin exchange rate.
As the currency is not considered as legal tender in any country, many financial experts are wary about how the exchange rates for Bitcoin are set and the risk this may present to investors.
The fund is managed in the US by SecondMarket, which will work both as broker and dealer.
The firm has invested £2 million in the venture.
Savvy investors only
Regulators will only allow savvy investors to put cash into the scheme – which means the door is only open to institutions and qualified investors, people making more than £125,000 a year for at least two years, or whose net worth exceeds £600,000.
The annual administration charge is 2% of the investment – and other charges may apply.
SecondMarket chief executive Barry Sibbert said: “We want to solve the problem of directly owning Bitcoin, which includes the worry of wiring money to new start and possibly unregulated financial institutions outside the US.”
Bitcoin has attracted a lot of attention in the financial world since launching as a currency in 2009.
The aim was to put forward an asset that was unaffected by foreign exchange rate fluctuations as no banks are involved in regulating the rate.
Discredited currency
Also, a finite number of 21 billion Bitcoin were introduced, so valuations could not be manipulated by simply generating more reserves.
So far, Bitcoin has seen 24 million transactions, and 10,000 vendors worldwide – mostly online ventures – will accept payment in the currency.
A Bitcoin was valued at £4.22 in around a year ago, before peaking at more than £181 in March 2013. At current rates one Bitcoin is worth around £70.
US authorities have tried to discredit and disrupt the currency as a payment channel for organised crime, but many investors are still keen on taking a chance they will make money despite the risk and poor publicity.
However, the German government has spoken out for the currency and will allow Bitcoin holdings to be redeemed against euros in banks.
