As reported by Reuters, Bank of America Merrill Lynch stopped processing orders for the Bitcoin Investment Trust nearly a month ago, on December 8, per a memo that has recently come to light.
In the internal memorandum, sent to approximately 17,000 brokers at Merrill Lynch and Merrill Edge, a trading sub-unit where clients manage their own trades, the company purportedly justifies the ban due to concerns about the "suitability and eligibility standards of this product."
The Bitcoin Investment Trust trades under the ticker symbol GBTC and is managed by Grayscale Investments, a subsidiary of Barry Silbert's Digital Currency Group. Silbert – a long-time financier who cut his teeth on Wall Street as an investment banker for Houlihan Lokey Howard & Zukin – founded Digital Currency Group in 2015 to oversee his multi-pronged foray into the budding cryptospace.
Recently, Silbert has come under fire for what some believe to be excessive hype pumping of cryptocurrencies for personal gain.
Shares in Bitcoin Investment Trust rose 1,550 percent last year – which actually surpassed bitcoin's own 1,300 percent gains.
Although many details remain shrouded regarding the motivation behind Merrill's internal memo, there is a possibility that the financial risk associated with bitcoin was compounded by the risk associated with Silbert's reputational capital.
In an email to Reuters, Silbert defends himself while somewhat unwittingly acknowledging the fact that Merrill has singled out his firm for exclusion. Per the email: "We look forward to speaking with Merrill Lynch and addressing any questions or concerns they have about Bitcoin Investment Trust. We are unaware of any similar policies at other brokerage firms."
Prior to the ban on December 8, Merrill Lynch clients and brokers were able to buy GBTC. Merrill clients that hold "historic" positions in GBTC will be allowed to maintain them in contrast to the ceasing of new orders. Clients with fee-based advisory accounts managed by Merrill will, however, have to sell their holdings.