The World's Largest Bitcoin Fund Just Took A Preliminary Step To Creating A US Bitcoin Exchange

Barry Silbert’s Bitcoin Investment Trust, likely the world’s largest Bitcoin investment fund, has announced it will begin buying and selling Bitcoins on the open market “on a pilot basis.”

In other words, it will become a market maker. Previously it had served as a vehicle for passively investing in Bitcoins.

“SecondMarket is currently buying bitcoin,” an announcement on SecondMarket’s website says. “Any bitcoin holders interested in selling blocks of bitcoin can benefit from our deep knowledge base of the bitcoin markets.”

Reached by phone this afternoon, Silbert said SecondMarket was capitalising on the technical problems and ensuing confidence crisis of the past 48 hours experienced by Mt. Gox, at one point the largest USD-traded exchange in the world.

“There wasn’t any long-term planning around a pilot for a two-way market, but with the Mt. Gox news, the fact that they were suspending withdrawals, we were getting hit up by people who wanted to buy and sell Bitcoin,” he said.

The move puts the Bitcoin Investment Trust and SecondMarket on the path to becoming a full-on exchange — a fully reliable version of which, Silbert says, is currently missing from the Bitcoin market. SecondMarket is already a registered broker-dealer.

“With Wall Street and institutional investors moving into Bitcoin, there is a clear need for a U.S.-based, regulated, compliant and trustworthy bitcoin exchange. This could be the first step in that direction,” he said in a follow-up email.

Silbert said the response to the market-making offer has already been strong. “We were not expecting this amount of incoming interest,” he said. “It confirms that there’s a real need and a real opportunity for a U.S.-based exchange.”

The Bitcoin Investment Trust manages $US65 million in assets.

The average Bitcoin price this afternoon was $US747.

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