Bitcoin Shop To Trade Publicly Over The Counter
Professor Joseph Grundfest weighs in on the "reverse merger" used by Bitcoin Shop Inc. to go public for The Wall Street Journal.
Bitcoin Shop Inc., TUCND +27.49% an online retailer, became the first U.S. publicly traded company with the word "bitcoin" in its name, a hallmark for a virtual currency whose rapid growth has spawned intense regulatory scrutiny.
Bitcoin Shop, which sells everything from soap to cellphones and takes bitcoin for payment, executed what is known as a reverse merger, according to filings with the Securities and Exchange Commission on Wednesday.
In past years, reverse mergers have been popular among China-based companies looking to be traded in the U.S., said Joseph Grundfest, a professor at Stanford Law School who has researched the practice.
"It typically arises when companies calculate that it is the cheapest and fastest way to the public market," he said.