XBT Investments has been established to provide investors with a simple, familiar and regulated way of gaining exposure to the price movement of Bitcoin without the challenges of buying, storing, and safekeeping Bitcoin themselves.
XBT intends to achieve this by investing in regulated derivatives which closely track the Bitcoin price.
Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralised digital currency, as the system works without a central bank or single administrator.
The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes using cryptography and recorded in a public, globally distributed ledger called a blockchain.
Bitcoins are traded for fiat currency (Australian dollars, U.S. dollars, Japanese yen, etc.) via Bitcoin exchanges and by private negotiation between parties.
There are multiple Bitcoin exchanges and therefore multiple Bitcoin prices at any point in time. There are however consensus price feeds published by various organisations which usually adopt a calculation method based on the volume weighted average prices from several of the more dominant Bitcoin exchanges.
Bitcoin Reference Rates
CME Group is one of the larger derivatives exchanges in the USA. In November 2016, CME launched two reference rates to accurately track the price of Bitcoin:
CME CF Bitcoin Reference Rate (BRR)
The BRR is the reference rate used for the settlement of CME Group’s Bitcoin futures contracts.
It is a daily reference rate of the U.S. Dollar price of one Bitcoin as of 4:00pm London time.
CME CF Bitcoin Real Time Index (BRTI)
The BRTI is a real time index of the U.S. Dollar price of one bitcoin, published once per second (24 hours per day, 7 days per week, 365 days per year).
It is representative of current bids and offers of market participants to buy or sell Bitcoin on constituent exchanges.
XBT Investment Objectives
The Company’s investment objectives are to construct and maintain a portfolio which tracks the BRR in Australian dollar terms, minus operational expenses.
The Company may substitute or consider other Bitcoin reference rates which are designed and published by reputable, regulated and experienced financial organisations.