Posted on July 29th, 2017 by Fitch
STOCKHOLM, JULY 28, 2017 — XBT Provider AB (Publ) (the “Issuer”) is conscious of the fact that there has been much media discussion in recent months in connection with the phenomenon of “forking” within crypto-currencies, most prominently in connection with bitcoin (which is the asset to which the Certificates of the Issuer are referenced). It should be noted that bitcoin forks are not an uncommon occurrence. The circumstances of each fork are unique and their relative significance varies. It is possible that a particular fork may result in a significant disruption to the underlying asset and, potentially, may result in a market disruption event should pricing become problematic following the fork. It is not possible to predict with accuracy the impact which any anticipated fork could have or for how long any resulting disruption may exist. To date, the forks which have been experienced by bitcoin have been successfully managed and integrated by the bitcoin community.
The Issuer wishes to clarify that, in the event of a bitcoin fork, the exact action which it may be required to take, or which it may be advisable to take, as a result thereof will be assessed and determined on a case-by-case basis.
If bitcoin were to experience a significant fork, it is considered likely that this will be the result of an alternative blockchain and its associated coin (each having a shared transaction history to bitcoin) has attracted sufficient mining power, and economic activity to enable it to develop and sustain its own chain. Following such an event, holders of bitcoin before the forking event (the chain split) will technically own both of the resulting coins which shared a common transaction history before the fork.
It should be noted that investors in the Issuer’s Certificates are not thereby holders of bitcoin. As disclosed in the Issuer’s Prospectus, its Certificates synthetically track the price of bitcoin via a hedging agreement between the Issuer and group companies of the guarantor of the Certificates, Global Advisors (Jersey) Limited (the “Guarantor”) and those group companies of the Guarantor hold bitcoin to support the Issuer’s Certificates.
The Issuer wishes to further clarify that its Certificates are designed to track “bitcoin” and not any alternative coin which results from a forking event and which shared a common transaction history prior to the fork. Therefore, the Issuer’s Certificates will, after a fork, be referenced to the coin which the bitcoin community and exchanges define, and consider to be, ‘bitcoin’. (As the holder of bitcoin, the group companies of the Guarantor will be entitled to hold both coins resulting from any fork).
It has been widely publicized that a bitcoin fork is anticipated to take place on August 1st 2017. In light of this anticipated fork, the following actions are being implemented by the Issuer and the Guarantor:
1. The Guarantor’s group companies have moved as much of their bitcoins held on account as is practicable in the circumstances to custodian infrastructure that will support both coins should a new coin result from the anticipated fork;
2. Should a new coin result from the fork, the Issuer will initiate a 3 month “observation period” during which the Issuer and Guarantor will monitor the relative success (or lack thereof) of the resultant coins, with a particular focus on monitoring the extent to which a consensus develops within the bitcoin community as to which coin is to be regarded as being ‘bitcoin’. This observation period is designed to enable the Issuer and Guarantor to assess the best course of action to take in order to maximize value for investors in the Issuer’s Certificates in circumstances where both resultant coins appear likely to remain in existence; and
3. Once the Issuer and Guarantor have agreed upon a course of action during the observation period, details of such proposal will be communicated to investors in the Issuer’s Certificates.
The Issuer wishes to reassure the investors in its Certificates that it will do all that can practicably be done in the circumstances to maximize value for investors in its Certificates.
About XBT Provider
XBT Provider AB (Publ) is the Swedish-domiciled issuer of Bitcoin Tracker One and Bitcoin Tracker Euro (COINXBT:SS, COINXBE:SS, respectively). These trackers are designed to mirror the return of the underlying asset, bitcoin (in Swedish Kronor and Euro, respectively). In 2015, Bitcoin Tracker One became the first bitcoin-referenced security available on a regulated exchange when it listed on NASDAQ OMX in Stockholm. Both certificates are available in 179 countries and are traded in the same manner as any other share or instrument listed on the Nasdaq exchange in Stockholm. The Issuer’s Prospectus is approved by the Swedish FSA (Finansinspektionen) and its products are listed on Nasdaq Nordic in Stockholm. XBT Provider AB (Publ) is not a licensed financial advisor. The views presented in this release are the opinions of the Board of XBT Provider AB (Publ) and no other party. Bitcoin is a volatile asset and its price (and the price of securities that are referenced to it) can move quickly. Prospective investors in the Issuer’s certificates should carefully consider the suitability of such an investment and, in connection with such a determination, should carefully read the Issuer’s latest Prospectus (including, in particular, the risk warnings set out therein).