Buy bitcoins on Nasdaq

[the founder]

http://blogs.wsj.com/moneybeat/2013/07/01/winklevoss-twins-file-to-launch-bitcoin-exchange-traded-product/

Breaking news

[1715057319]

1715057319

[1715057319]

1715057319

[1715057319]

1715057319

[1715057319]

1715057319

[btceic]

http://blogs.wsj.com/moneybeat/2013/07/01/winklevoss-twins-file-to-launch-bitcoin-exchange-traded-product/

Breaking news

Interesting, btc-e last is 80 btc/usd, why would (if any) this have any effect on the price?


Edit: link to the Form S-1:
http://www.sec.gov/Archives/edgar/data/1579346/000119312513279830/d562329ds1.htm

[the founder]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

[btceic]

Cherry picking from the S-1:

The Winklevoss Bitcoin Trust (Trust) will issue Winklevoss Bitcoin Shares (Shares) which represent units of fractional undivided beneficial interest in and ownership of the Trust. Math-Based Asset Services LLC is the sponsor of the Trust (Sponsor) and [TRUSTEE] is the trustee and custodian of the Trust (Trustee) using proprietary and patent-pending technology to administer the Trust. The Trust intends to issue additional Shares on a continuous basis.

The Shares may be purchased from the Trust only in one or more blocks of [50,000] Shares (a block of [50,000] Shares is called a Basket). The Trust will issue Shares in Baskets to certain authorized participants (Authorized Participants) on an ongoing basis as described in “Plan of Distribution.” Baskets will be offered continuously at the net asset value (NAV) for [50,000] Shares on the day that an order to create a Basket is accepted by the Trustee. The Trust will not issue fractions of a Basket.

[bbit]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

Really pretty slick news to hear! 

[btceic]

Cherry Picking Continued:

Emphasis is mine

The Trust holds “Bitcoins,” a digital commodity based on an open source cryptographic protocol existing on the online, end-user-to-end-user network hosting the public transaction ledger, known as the “Blockchain,” and the source code comprising the basis for the cryptographic and algorithmic protocols governing the issuance of and transactions in Bitcoins (the “Bitcoin Network”).

I would imagine that they have consulted with attorneys regarding bitcoin being a commodity or other, not sure if this is good, bad or otherwise news.

[SamS]

Also known as how do you exit an illiquid market without destroying the price...

[btceic]

a Basket equals a block of [50,000] Shares

The initial number of Bitcoins required for deposit with the Trust to create Shares is [10,000] per Basket.

The number of Bitcoins required to create a Basket, or to be delivered upon the redemption of a Basket, will gradually decrease over time, due to the accrual of the Trust’s expenses, the transfer of the Trust’s Bitcoins to pay the Sponsor’s Fee and the transfer of the Trust’s Bitcoins to pay any Trust expenses not assumed by the Sponsor.

Edit: does this last portion presume that the number of bitcoins will gradually decrease over time to create a new basket because they believe the value of bitcoins will rise? or is it by some other mechanism that I am not seeing this second?

[CurbsideProphet]

Cherry Picking Continued:

Emphasis is mine

The Trust holds “Bitcoins,” a digital commodity based on an open source cryptographic protocol existing on the online, end-user-to-end-user network hosting the public transaction ledger, known as the “Blockchain,” and the source code comprising the basis for the cryptographic and algorithmic protocols governing the issuance of and transactions in Bitcoins (the “Bitcoin Network”).

I would imagine that they have consulted with attorneys regarding bitcoin being a commodity or other, not sure if this is good, bad or otherwise news.

Right now it's only their opinion.

The Sponsor believes that, on balance, the important features of Bitcoins and other Digital Math-Based Assets are those that are characteristics of commodities and therefore has referred to and discussed these assets as such. It is not known whether US or foreign regulators will share this view, adopt a single, different view or espouse a variety of differing views; this regulatory uncertainty creates risks for the Trust and its Shares.

[CurbsideProphet]

Trust will be terminated if:

the Trust is determined to be a “money transmitter” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Trust receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

How exactly would they not be considered a money transmitter?  They're acting on behalf of a third party (the investor) to purchase Bitcoin.

[WaverleyStreet]

http://blogs.wsj.com/moneybeat/2013/07/01/winklevoss-twins-file-to-launch-bitcoin-exchange-traded-product/

Breaking news

Interesting, btc-e last is 80 btc/usd, why would (if any) this have any effect on the price?


Edit: link to the Form S-1:
http://www.sec.gov/Archives/edgar/data/1579346/000119312513279830/d562329ds1.htm

yes i will modding that board for sure will be like so much fun Erics' funny money at work!!LOL

>>LOVE IN IT!!!!****FREAKING AWESOME LINK BRUDDA!!!!!!

[btceic]

Trust will be terminated if:

the Trust is determined to be a “money transmitter” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Trust receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

How exactly would they not be considered a money transmitter?  They're acting on behalf of a third party (the investor) to purchase Bitcoin.

Because they won't be delivering bitcoin to the end-user, they will be purchasing it on behalf of the end-user for the trust where that ownership is represented as shares, no?

we need @msantori in this thread

[candoo]

They just want to try to stop the price from dropping  below 50$

[WaverleyStreet]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

will we still get our bath salt divys????LMFAO!!!!


>>RADAR SPINNING ON THIS 1!!!!>>i reported this to the NYSE shark tank we will see what they say!!!LOL

[MJGrae]

Trust will be terminated if:

the Trust is determined to be a “money transmitter” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Trust receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

How exactly would they not be considered a money transmitter?  They're acting on behalf of a third party (the investor) to purchase Bitcoin.

Because just like they said, they are treating bitcoin as a commodity, and not a currency. To them, and for this security, bitcoin is being treated the same as gold or any other commodity that can be securitized.

[CurbsideProphet]

Trust will be terminated if:

the Trust is determined to be a “money transmitter” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Trust receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

How exactly would they not be considered a money transmitter?  They're acting on behalf of a third party (the investor) to purchase Bitcoin.

Because just like they said, they are treating bitcoin as a commodity, and not a currency. To them, and for this security, bitcoin is being treated the same as gold or any other commodity that can be securitized.

Ah, yeah you're right.  So I guess the million dollar question now is does the SEC & other regulatory bodies agree with them.

[CurbsideProphet]

If the IPO is for 1 million shares to raise $20 million and from the S-1:

The Shares are intended to offer investors an opportunity to participate in the Bitcoins markets through an investment in securities. On the first day of trading, each Share in the initial Baskets was comprised of [0.20] Bitcoins.

This puts their estimated fair value of Bitcoin at $100, correct? 

[WaverleyStreet]

Cherry picking from the S-1:

The Winklevoss Bitcoin Trust (Trust) will issue Winklevoss Bitcoin Shares (Shares) which represent units of fractional undivided beneficial interest in and ownership of the Trust. Math-Based Asset Services LLC is the sponsor of the Trust (Sponsor) and [TRUSTEE] is the trustee and custodian of the Trust (Trustee) using proprietary and patent-pending technology to administer the Trust. The Trust intends to issue additional Shares on a continuous basis.

The Shares may be purchased from the Trust only in one or more blocks of [50,000] Shares (a block of [50,000] Shares is called a Basket). The Trust will issue Shares in Baskets to certain authorized participants (Authorized Participants) on an ongoing basis as described in “Plan of Distribution.” Baskets will be offered continuously at the net asset value (NAV) for [50,000] Shares on the day that an order to create a Basket is accepted by the Trustee. The Trust will not issue fractions of a Basket.

basically what i see is Eric V doing his best to throw us under the bus so he can get rich pumping the bitcoin pyramid to his elitist Wall Street buddies!!LOLLL

i bet he used all that SatoshiDice funny money to pay for the Lawyers who wrote up that boilerplate!!LOL


>>>CAN YOU SAY: TORCHES AND PITCHFORKS?(no pun intended)!!!!

[btceic]

Just thought of this...

This will force the regulators hands in making a decision no?

They will have to define it as some kind of asset at the least.

Good bad or otherwise we will know soon what bitcoin is or isn't

[Mytche]

If the IPO is for 1 million shares to raise $20 million and from the S-1:

The Shares are intended to offer investors an opportunity to participate in the Bitcoins markets through an investment in securities. On the first day of trading, each Share in the initial Baskets was comprised of [0.20] Bitcoins.

This puts their estimated fair value of Bitcoin at $100, correct? 

100.45

[CurbsideProphet]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

It's still for the rich.  You're going to need about a million to invest, give or take depending on where the price goes.

On the first day of trading, each Share in the initial Baskets was comprised of [0.20] Bitcoins, and each initial Basket was made up of [10,000] Bitcoins.

They're only selling them in "baskets" so the minimum purchase is 10,000 BTC.

[DeathAndTaxes]

Just thought of this...

This will force the regulators hands in making a decision no?

They will have to define it as some kind of asset at the least.

Good bad or otherwise we will know soon what bitcoin is or isn't

Don't expect regulators to work together, make sense, or even talk. It is entirely possible that SEC will define Bitcoin as a tradeable asset, CFTC define it as a "virtual commodity" and FinCEN still call Bitcoin "monetary value" (and thus subject exchangers to MSB/MT regulations).  Meanwhile the states offer tortured illogical notices and guidance due to a lack of basic understanding on what Bitcoin is.

Actually I would count on the above happening.  Maybe in a decade or so and hundreds of court cases you will see something resembling a logical regulator environment emerge.

[WaverleyStreet]

Trust will be terminated if:

the Trust is determined to be a “money transmitter” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Trust receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

How exactly would they not be considered a money transmitter?  They're acting on behalf of a third party (the investor) to purchase Bitcoin.

“money transmitter”

how much you wanna bet this has something to do with mt. gox !!!LMAO!!

>>WTFFF!!!

[MJGrae]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

It's still for the rich.  You're going to need about a million to invest, give or take depending on where the price goes.

On the first day of trading, each Share in the initial Baskets was comprised of [0.20] Bitcoins, and each initial Basket was made up of [10,000] Bitcoins.

They're only selling them in "baskets" so the minimum purchase is 10,000 BTC.

The purpose of the baskets is to place the assets with primary investors who will turn around and trade them on secondary markets. There will be very few, if any, private investors who purchase any baskets. In fact, getting on the list of initial buyers of these baskets is incredibly hard and requires an enormous amount of capital. This is how all assets are marketed.

In fact, when an IPO takes place, those "baskets" have already been sold to the institutional investors and the IPO is those institutional investors offering them on the public markets for the first time.


--> Heavily involved with financial markets and even work on the trading floor of the Chicago Board of Trade.

[DeathAndTaxes]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

It's still for the rich.  You're going to need about a million to invest, give or take depending on where the price goes.

On the first day of trading, each Share in the initial Baskets was comprised of [0.20] Bitcoins, and each initial Basket was made up of [10,000] Bitcoins.

They're only selling them in "baskets" so the minimum purchase is 10,000 BTC.

No you are mistaken.  The basket is 50,000 shares = 1,000 BTC but the purpose of the basket is merely to fund the IPO (and later allow issuance and redemption of shares).  This is a filing for a PUBLIC offering on NASDAQ.  If they wanted to have a private offering for high net worth individuals, no registration would be necessary they could operated under a Reg D exemption.  If approved and listed on an exchange it would be available to anyone with a brokerage account in any amount even a single share (0.2 BTC worth).  Now pre-IPO access will be limited to high net worth individuals and institutional investors but honestly that is the case for just about any IPO.

It may help to look at how physical gold trusts, existing financial product which is very similar, work. For a physical gold trust, to issue new shares or redeem existing shares requires a basket of thousands of shares.  This is almost never done by anyone other that institutional investors.  However any retail investor can use their "normal" brokerage account and TRADE existing shares of the trust (TRADE not ISSUE or REDEEM).  One could even trade a single share (although brokerage fees make that uneconomical). The ability to issue or redeem baskets of shares allows the fund to remain balanced.  Based on the S-1 this is very very similar structure just replace Gold with Bitcoin.

[WaverleyStreet]

They just want to try to stop the price from dropping  below 50$

(repost)


i'm sorry did you not get the memo!!LOL

BITCOIN = SATOSHIS' REBOOT MODE IN EFFECT!!!

>>TRUST ME WALL STREET INSIDERS LOVE WHIPSAW VOLATILITY! weeeeeeevvvvvv

[btceic]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

It's still for the rich.  You're going to need about a million to invest, give or take depending on where the price goes.

On the first day of trading, each Share in the initial Baskets was comprised of [0.20] Bitcoins, and each initial Basket was made up of [10,000] Bitcoins.

They're only selling them in "baskets" so the minimum purchase is 10,000 BTC.

No you are mistaken.  The basket is 10,000 shares = 2000 BTC but the purpose of the basket is merely to fund the IPO.  This is a PUBLIC offering on NASDAQ.  Once it goes public anyone with a brokerage account could buy any amount even a single share.  

Really this is no different than Gold trust for example.  To issue new shares or redeem existing shares requires a basket of thousands of shares however you can right now login to your brokerage account and TRADE (not ISSUE or REDEEM) a single share if you want.  The ability to issue or redeem baskets of shares allows the fund to remain balanced.  

For the record as far as I can tell this is just a preliminary filling, with numerous omissions, also I do not see anywhere where it states the exchange and definitely does not state nasdaq as the exchange.

[CurbsideProphet]

Thanks MJGrae and DeathAndTaxes.  I'm used to reading 10-Q's and 10-K's but rarely if ever look at S-1s.  

[DeathAndTaxes]

For the record as far as I can tell this is just a preliminary filling, with numerous omissions, also I do not see anywhere where it states the exchange and definitely does not state nasdaq as the exchange.

Fixed.  Not sure where I got that from.

[gweedo]

This has no direct effect on bitcoins, but I am happy cause it is a venture capital firm that deals with bitcoin related companies and this should help the economy.

[Arvicco]

If I'm reading the filing correctly, this is essentially an ETF with BTC as a base asset. So, if this gets approved and listed, everyone will be able to buy bitcoins in any amount through their favorite broker. Institutional investors into BTC, anyone?

Trust investors will be also able to convert this instrument into underlying BTC in 10K increments. Again, this gives a clean and easy access to BTC for institutional investors.

And for every additional 50K units the trust issues, it has to buy 10K BTC on the open market. Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

[WaverleyStreet]

Trust will be terminated if:

the Trust is determined to be a “money transmitter” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Trust receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

How exactly would they not be considered a money transmitter?  They're acting on behalf of a third party (the investor) to purchase Bitcoin.

Because just like they said, they are treating bitcoin as a commodity, and not a currency. To them, and for this security, bitcoin is being treated the same as gold or any other commodity that can be securitized.

Ah, yeah you're right.  So I guess the million dollar question now is does the SEC & other regulatory bodies agree with them.

short answer: NOT A CHANCE IN HELL!!

>>WTF!!!!

[WaverleyStreet]

Just thought of this...

This will force the regulators hands in making a decision no?

They will have to define it as some kind of asset at the least.

Good bad or otherwise we will know soon what bitcoin is or isn't

Don't expect regulators to work together, make sense, or even talk. It is entirely possible that SEC will define Bitcoin as a tradeable asset, CFTC define it as a "virtual commodity" and FinCEN still call Bitcoin "monetary value" (and thus subject exchangers to MSB/MT regulations).  Meanwhile the states offer tortured illogical notices and guidance due to a lack of basic understanding on what Bitcoin is.

Actually I would count on the above happening.  Maybe in a decade or so and hundreds of court cases you will see something resembling a logical regulator environment emerge.

Bitcoin promoters are just like the geek version of pennystock cults with all the hype, pumping and lack of integrity!!LOL

>>WTF!!!

[WaverleyStreet]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

It's still for the rich.  You're going to need about a million to invest, give or take depending on where the price goes.

On the first day of trading, each Share in the initial Baskets was comprised of [0.20] Bitcoins, and each initial Basket was made up of [10,000] Bitcoins.

They're only selling them in "baskets" so the minimum purchase is 10,000 BTC.

No you are mistaken.  The basket is 50,000 shares = 1,000 BTC but the purpose of the basket is merely to fund the IPO (and later allow issuance and redemption of shares).  This is a filing for a PUBLIC offering on NASDAQ.  If they wanted to have a private offering for high net worth individuals, no registration would be necessary they could operated under a Reg D exemption.  If approved and listed on an exchange it would be available to anyone with a brokerage account in any amount even a single share (0.2 BTC worth).  Now pre-IPO access will be limited to high net worth individuals and institutional investors but honestly that is the case for just about any IPO.

It may help to look at how physical gold trusts, existing financial product which is very similar, work. For a physical gold trust, to issue new shares or redeem existing shares requires a basket of thousands of shares.  This is almost never done by anyone other that institutional investors.  However any retail investor can use their "normal" brokerage account and TRADE existing shares of the trust (TRADE not ISSUE or REDEEM).  One could even trade a single share (although brokerage fees make that uneconomical). The ability to issue or redeem baskets of shares allows the fund to remain balanced.  Based on the S-1 this is very very similar structure just replace Gold with Bitcoin.

Gold is a tangible asset here we have nothing proven except Silk Road and Eric Vs' SatoshiDice!!!LOL

>>WTF!!!

[WaverleyStreet]

If I'm reading the filing correctly, this is essentially an ETF with BTC as a base asset. So, if this gets approved and listed, everyone will be able to buy bitcoins in any amount through their favorite broker. Institutional investors into BTC, anyone?

Trust investors will be also able to convert this instrument into underlying BTC in 10K increments. Again, this gives a clean and easy access to BTC for institutional investors.

And for every additional 50K units the trust issues, it has to buy 10K BTC on the open market. Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

Eric V. and friends are controlling somewhere around half of all BTC -Bitcoins ever produced so he has many to get rid of that's why it's backdoor reboot command executed via satoshi himself!!!LOL

>>WTF!!!

[Zaih]

If I'm reading the filing correctly, this is essentially an ETF with BTC as a base asset. So, if this gets approved and listed, everyone will be able to buy bitcoins in any amount through their favorite broker. Institutional investors into BTC, anyone?

Trust investors will be also able to convert this instrument into underlying BTC in 10K increments. Again, this gives a clean and easy access to BTC for institutional investors.

And for every additional 50K units the trust issues, it has to buy 10K BTC on the open market. Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

Eric V. and friends are controlling somewhere around half of all BTC -Bitcoins ever produced so he has many to get rid of that's why it's backdoor reboot command executed via satoshi himself!!!LOL

>>WTF!!!

Your crazy.. 

[johnyj]

Also known as how do you exit an illiquid market without destroying the price...

The beautiful thing with bitcoin is that you may never need to liquidate them, you just simply spend them if the acceptance is enough wide, means only money inflow, no outflow

[WaverleyStreet]

Also known as how do you exit an illiquid market without destroying the price...

The beautiful thing with bitcoin is that you may never need to liquidate them, you just simply spend them if the acceptance is enough wide, means only money inflow, no outflow

now you are catching on---i agree that's why i collect every kind of "coin" i can get>> get it?LOL

>>NICEEEEE

[vokain]

Also known as how do you exit an illiquid market without destroying the price...

The beautiful thing with bitcoin is that you may never need to liquidate them, you just simply spend them if the acceptance is enough wide, means only money inflow, no outflow

i agree that's why i collect every kind of "coin" i can get>> get it?LOL

>>NICEEEEE

Nice to see reason simply oozing through these forums. You do realize the Winklevii have investments in other Bitcoin businesses, they will not shoot themselves in the foot and compromise their investment.

[WaverleyStreet]

Also known as how do you exit an illiquid market without destroying the price...

The beautiful thing with bitcoin is that you may never need to liquidate them, you just simply spend them if the acceptance is enough wide, means only money inflow, no outflow

i agree that's why i collect every kind of "coin" i can get>> get it?LOL

>>NICEEEEE

Nice to see reason simply oozing through these forums. You do realize the Winklevii have investments in other Bitcoin businesses, they will not shoot themselves in the foot and compromise their investment.

Warren B and friends sey no like bitcoin pumpjobbers~ he say ~> BTC = Rat Poison

>>DO YOU NEED A LINK???*MUST SEE!*

[RandyFolds]

Also known as how do you exit an illiquid market without destroying the price...

The beautiful thing with bitcoin is that you may never need to liquidate them, you just simply spend them if the acceptance is enough wide, means only money inflow, no outflow

i agree that's why i collect every kind of "coin" i can get>> get it?LOL

>>NICEEEEE

Nice to see reason simply oozing through these forums. You do realize the Winklevii have investments in other Bitcoin businesses, they will not shoot themselves in the foot and compromise their investment.

Warren B and friends sey no like bitcoin pumpjobbers~ he say = Rat Poison

>>DO YOU NEED A LINK???*MUST SEE!*

Do you need a lesson in typing? Why is everything you write bolded? Is it just that. fucking. important?

[johnyj]

Warren B and friends sey no like bitcoin pumpjobbers~ he say ~> BTC = Rat Poison

>>DO YOU NEED A LINK???*MUST SEE!*

Exactly, Rat = Banks

[Inedible]

If I'm reading the filing correctly, this is essentially an ETF with BTC as a base asset. So, if this gets approved and listed, everyone will be able to buy bitcoins in any amount through their favorite broker. Institutional investors into BTC, anyone?

Trust investors will be also able to convert this instrument into underlying BTC in 10K increments. Again, this gives a clean and easy access to BTC for institutional investors.

And for every additional 50K units the trust issues, it has to buy 10K BTC on the open market. Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

Eric V. and friends are controlling somewhere around half of all BTC -Bitcoins ever produced so he has many to get rid of that's why it's backdoor reboot command executed via satoshi himself!!!LOL

>>WTF!!!

Your crazy.. 

His crazy indeed...

[DeathAndTaxes]

Nice to see reason simply oozing through these forums. You do realize the Winklevii have investments in other Bitcoin businesses, they will not shoot themselves in the foot and compromise their investment.

Take a look at his posting history and then just click ignore.  It is nonsensical rants using broken giberish in every thread.

[Inedible]

Take a look at his posting history and then just click ignore.  It is nonsensical rants using broken giberish in every thread.

English might not be their first language.

Nonsense might be though.

[WaverleyStreet]

" Take a look at his posting history " >>

yes it i did the math on that one a few days ago= it would take a speed reader over 2 weeks(no sleep) to pull that one off!!LMFAO!!

>>WALL STREET LOVEEEEEE!!LOL!!!

[SamS]

Also known as how do you exit an illiquid market without destroying the price...

The beautiful thing with bitcoin is that you may never need to liquidate them, you just simply spend them if the acceptance is enough wide, means only money inflow, no outflow

i agree that's why i collect every kind of "coin" i can get>> get it?LOL

>>NICEEEEE

Nice to see reason simply oozing through these forums. You do realize the Winklevii have investments in other Bitcoin businesses, they will not shoot themselves in the foot and compromise their investment.

It just depends on where they think they will make the greatest return and what their exit strategy is. By selling out in an IPO at market through a securities offering, they get 100% out with no slippage -- other than the offering cost which might actually be priced in as well. It's quite smart if they can get it funded and represents an enormous return on investment for them.

Their other public Bitcoin investments are substantially smaller than their "currency" profits and so they get to take money off the table and continue to play for free. They're not flooding the market with Bitcoins either -- rather the opposite in fact. And of course, like the fund in Malta, they provide a way for traders to hedge their positions by shorting the EFT.

This all seems quite reasonable to me and doesn't involve shooting anyone in the foot.

[atomium]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

[clout]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

[DeathAndTaxes]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

Not weeks.  Months if lucky but a year is probably more realistic.  Knowing regulators years (as in plural) would be bad but not impossible.  There is no standard time a lot depends on if regulators have questions and how quickly those questions are answered to their satisfaction, with Bitcoin and this ETF being a "first of its kind" that could mean a lot of back and forth.  Once regulators approve it, they need to find an exchange to list it.  The IPO of a major company (think facebook) can take 2-3 years.  ETFs are simpler and should be quicker, but anyone thinking "fast" is measured in days or weeks will be disappointed.

[DeathAndTaxes]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold? 

[MJGrae]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

Nothing happens fast when you bring in the regulators. And this certainly won't be fast due to its peculiar nature and untested ground. Expect it to take quite some time. (Months, perhaps even years. No one can say because this is such a novel concept for us all)

[clout]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold? 

Yeah no shit, but its bitcoin. Not gold. Gold is valued by a historical and global consensus. If you go anywhere in the world they will know and accept gold. The same can't be said about bitcoin. There's no reason to invest in bitcoin over gold for a normal investor. For bitcoin to gain the same notoriety that gold has, it has to be used by people first; in the way that gold was primarily used as medium of exchange and not solely a store of value as it is today. To package bitcoin as an ETF is premature because it misses the necessary steps for bitcoin adoption and development. People need to interact with bitcoin in person first not through a trading mechanism.

[DeathAndTaxes]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold? 

Yeah no shit, but its bitcoin. Not gold. Gold is valued by a historical and global consensus. If you go anywhere in the world they will know and accept gold. The same can't be said about bitcoin. There's no reason to invest in bitcoin over gold for a normal investor. For bitcoin to gain the same notoriety that gold has, it has to be used by people first; in the way that gold was primarily used as medium of exchange and not solely a store of value as it is today. To package bitcoin as an ETF is premature because it misses the necessary steps for bitcoin adoption and development. People need to interact with bitcoin in person first not through a trading mechanism.

Well I would argue that Bitcoin is accepted more place than gold.  Let me know where I can buy a domain name with Gold.  Still since you are clinging to the value as a medium of exchange which has nothing to do with proper price (your claim) lets use copper instead.

What is the metric for the proper price of copper.  Is copper properly priced right now according to your magical pricing metric.  If not then how/why are there copper financial instruments.  Without knowing what the proper price is nobody would buy it, hence there is absolutely no volume on any copper instruments.  Er wait yes there is. 

[Mytche]

Also known as how do you exit an illiquid market without destroying the price...

I don't think so, this is very expensive and time consuming way to sell their position.  It would be much cheaper and easier to arrange a series of private deals. 

[atomium]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

Not weeks.  Months if lucky but a year is probably more realistic.  Knowing regulators years (as in plural) would be bad but not impossible.  There is no standard time a lot depends on if regulators have questions and how quickly those questions are answered to their satisfaction, with Bitcoin and this ETF being a "first of its kind" that could mean a lot of back and forth.  Once regulators approve it, they need to find an exchange to list it.  The IPO of a major company (think facebook) can take 2-3 years.  ETFs are simpler and should be quicker, but anyone thinking "fast" is measured in days or weeks will be disappointed.

thanks for the answer! Hopefully it wont take years and just a couple months

[CurbsideProphet]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold? 

Yeah no shit, but its bitcoin. Not gold. Gold is valued by a historical and global consensus. If you go anywhere in the world they will know and accept gold. The same can't be said about bitcoin. There's no reason to invest in bitcoin over gold for a normal investor. For bitcoin to gain the same notoriety that gold has, it has to be used by people first; in the way that gold was primarily used as medium of exchange and not solely a store of value as it is today. To package bitcoin as an ETF is premature because it misses the necessary steps for bitcoin adoption and development. People need to interact with bitcoin in person first not through a trading mechanism.

The "normal" investor has a much wider range of options to invest in and it's clear that they're looking for alternatives.  Look at the VIX for example, the average investor can speculate on volatility.  Something doesn't have to be tangible or have a long standing history in order for it to be investable by the masses.

[Mytche]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

Oh interesting.  I mentioned bitcoin to my retirement fund manager in January, and she looked at me like I was crazy (of course she'd never heard of it).  A lot has happened since then.  So I wonder if I asked her now if she'd be all over it?

I know you can hold physical gold in roth wouldn't it be possible to hold Bitcoin?

[WaverleyStreet]

"Nothing happens fast when you bring in the regulators."

have you ever heard of a trading halt of a security~that 'ish can happen fast i'm still holding several securities that have been halted!LOL

>>WHY THIS HAPPENS EVERY TIME DOAHHH!!!

[DeathAndTaxes]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

Oh interesting.  I mentioned bitcoin to my retirement fund manager in January, and she looked at me like I was crazy (of course she'd never heard of it).  A lot has happened since then.  So I wonder if I asked her now if she'd be all over it?

I know you can hold physical gold in roth wouldn't it be possible to hold Bitcoin?

Not yet however if you can get the IRS to accept the premise and someone starts a trustee which handles physical Bitcoins in a manner similar to Bullion in theory it is possible.

[WaverleyStreet]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold?  

AU (Gold) metric is at least somewhat linked to BTCitcoin because it's involved with the manufacture of computer chips!HAAA

>>SEE HOW THAT WORKS!!!

[Mytche]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

Oh interesting.  I mentioned bitcoin to my retirement fund manager in January, and she looked at me like I was crazy (of course she'd never heard of it).  A lot has happened since then.  So I wonder if I asked her now if she'd be all over it?

I know you can hold physical gold in roth wouldn't it be possible to hold Bitcoin?

Not yet however if you can get the IRS to accept the premise and someone starts a trustee which handles physical Bitcoins in a manner similar to Bullion in theory it is possible.

I don't want to get to off topic, but what if you setup an IRA LLC?

[hmmmstrange]

Can't wait until I have my IRA full of bitcoins!

[clout]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold? 

Yeah no shit, but its bitcoin. Not gold. Gold is valued by a historical and global consensus. If you go anywhere in the world they will know and accept gold. The same can't be said about bitcoin. There's no reason to invest in bitcoin over gold for a normal investor. For bitcoin to gain the same notoriety that gold has, it has to be used by people first; in the way that gold was primarily used as medium of exchange and not solely a store of value as it is today. To package bitcoin as an ETF is premature because it misses the necessary steps for bitcoin adoption and development. People need to interact with bitcoin in person first not through a trading mechanism.

The "normal" investor has a much wider range of options to invest in and it's clear that they're looking for alternatives.  Look at the VIX for example, the average investor can speculate on volatility.  Something doesn't have to be tangible or have a long standing history in order for it to be investable by the masses.

yeah precisely investors have a wide range of options to invest, which is why they wouldn't put there money into bitcoin. honestly i am bitcoin enthusiast and I think that crypto currencies can actually change the global economy as we know it, but if i were a portfolio manager i wouldnt put money into bitcoin even if i were looking for alternative investments. there are so many other things you can invest in. in this stage we shouldnt be thinking of crypto currencies as investments we should be thinking of them as currencies that is where there inherent value comes from, its derived from the fact that they can and will progressively improve as mediums of exchange, transcendent modern banking systems.

[Mytche]

Now your 401k can invest in bitcoins,  retirement funds, every wall street trader...  this is opening floodgates.

Oh interesting.  I mentioned bitcoin to my retirement fund manager in January, and she looked at me like I was crazy (of course she'd never heard of it).  A lot has happened since then.  So I wonder if I asked her now if she'd be all over it?

I know you can hold physical gold in roth wouldn't it be possible to hold Bitcoin?

Not yet however if you can get the IRS to accept the premise and someone starts a trustee which handles physical Bitcoins in a manner similar to Bullion in theory it is possible.

I don't want to get to off topic, but what if you setup an IRA LLC?

did some reading and it looks like -- your statement is right "not yet" even in an IRA LLC

[vokain]

Can't wait until I have my IRA full of bitcoins!

Bitcoins are my IRA

[Foxpup]

Also known as how do you exit an illiquid market without destroying the price...

I don't think so, this is very expensive and time consuming way to sell their position.  It would be much cheaper and easier to arrange a series of private deals. 

It would not be cheaper. Simply selling that many coins will cause the price to crash, which is bad news for the seller. When you want to make a ton of money out of a multi-million dollar asset that can't easily be liquidated, an IPO is usually the standard "exit strategy", as difficult and time consuming as it may be.

[cypherdoc]

Just thought of this...

This will force the regulators hands in making a decision no?

They will have to define it as some kind of asset at the least.

Good bad or otherwise we will know soon what bitcoin is or isn't

forcing them to make a decision as to exactly what THEY think Bitcoin is will only be good.  why?  b/c it will paint them into a corner which they won't be able to get out of and which Bitcoin will then route around. 

they currently are getting away with calling Bitcoin whatever they want at this point in the name of regulating it every which way.

[clout]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold?  

Yeah no shit, but its bitcoin. Not gold. Gold is valued by a historical and global consensus. If you go anywhere in the world they will know and accept gold. The same can't be said about bitcoin. There's no reason to invest in bitcoin over gold for a normal investor. For bitcoin to gain the same notoriety that gold has, it has to be used by people first; in the way that gold was primarily used as medium of exchange and not solely a store of value as it is today. To package bitcoin as an ETF is premature because it misses the necessary steps for bitcoin adoption and development. People need to interact with bitcoin in person first not through a trading mechanism.

Well I would argue that Bitcoin is accepted more place than gold.  Let me know where I can buy a domain name with Gold.  Still since you are clinging to the value as a medium of exchange which has nothing to do with proper price (your claim) lets use copper instead.

What is the metric for the proper price of copper.  Is copper properly priced right now according to your magical pricing metric.  If not then how/why are there copper financial instruments.  Without knowing what the proper price is nobody would buy it, hence there is absolutely no volume on any copper instruments.  Er wait yes there is.  

i dont think you understand how commodities are traded. copper is completely different than gold and bitcoin. gold isnt like most comodities because it doesnt really have an industrial use, only 10% of it is used in such a way. the price of gold is based on historical prices of gold in the context of the global econonomy. the historical price trends are used to predict future prices of gold, from which the current price is derived. there are mechanisms to valuing gold. you essentially value gold based on how you believe other people will perceive the importance of gold compared to other investments.

copper on the other hand is valued by its current and future industrial usage. its pretty easy to evaluate that.

bitcoin is like gold, in so far as it is a safe haven when other stores of value loose their value. this is why the price went up with the cyprus crisis, which is comparable to the price of gold going on a steady upward trend after the global economic crisis of 2008. the problem with valuing bitcoin is that you dont know how people are going to perceive its future value nor do you even know if they will adopt it as a currency.

bitcoin is not the same as commodities.  

also bitcoin is not accepted more places than gold, thats a completely fallacious statement

[QuestionAuthority]

Are there mods working here anymore? I really wanted to read this thread but its polluted with garbage. It's like looking at an ignore wall with the occasional post!

@DnT

You mentioned that different agencies will likely define Bitcoin in different ways and I agree with you. What do you think the correct definition, or should I say most favorable definition, of Bitcoin is and do you see a way of presenting that definition to different departments (like a letter campaign) to help speed along the correct legal perception of Bitcoin?

[WaverleyStreet]

While I do agree that an ETF will help with hedging investments in bitcoin, it doesn't make the price more stable which is necessary for widespread adoption and a subsequent increase in the value. People on wallstreet are not going to invest in bitcoin just because it is packaged as an ETF. For them it would be tantamount to investing in penny stocks since the ETF itself doesnt bulster the underlying value of bitcoin and there is no metric for how bitcoin should be valued.

What?  There is no metric for how any commodity should be valued.  What is the metric for the correct price of gold?  

Yeah no shit, but its bitcoin. Not gold. Gold is valued by a historical and global consensus. If you go anywhere in the world they will know and accept gold. The same can't be said about bitcoin. There's no reason to invest in bitcoin over gold for a normal investor. For bitcoin to gain the same notoriety that gold has, it has to be used by people first; in the way that gold was primarily used as medium of exchange and not solely a store of value as it is today. To package bitcoin as an ETF is premature because it misses the necessary steps for bitcoin adoption and development. People need to interact with bitcoin in person first not through a trading mechanism.

The "normal" investor has a much wider range of options to invest in and it's clear that they're looking for alternatives.  Look at the VIX for example, the average investor can speculate on volatility.  Something doesn't have to be tangible or have a long standing history in order for it to be investable by the masses.

yeah precisely investors have a wide range of options to invest, which is why they wouldn't put there money into bitcoin. honestly i am bitcoin enthusiast and I think that crypto currencies can actually change the global economy as we know it, but if i were a portfolio manager i wouldnt put money into bitcoin even if i were looking for alternative investments. there are so many other things you can invest in. in this stage we shouldnt be thinking of crypto currencies as investments we should be thinking of them as currencies that is where there inherent value comes from, its derived from the fact that they can and will progressively improve as mediums of exchange, transcendent modern banking systems.

yeah reel talk- we looked at BTC as being a wildly speculative buy@$10 pps i was dding mostly inspired to buy cheap drugs to flip somehow but the quality sucked and ravers nowadaze with those damn new police type testing kits = game 0ver!

>>WTF!!!LOL

[johnyj]

From numbers, they actually own 200,000 bitcoins, seems that all their coins went into this IPO

[BitTrade]

yes i will modding that board for sure will be like so much fun Erics' funny money at work!!LOL

>>LOVE IN IT!!!!****FREAKING AWESOME LINK BRUDDA!!!!!!

Eric V. and friends are controlling somewhere around half of all BTC -Bitcoins ever produced so he has many to get rid of that's why it's backdoor reboot command executed via satoshi himself!!!LOL

>>WTF!!!

Bitcoin promoters are just like the geek version of pennystock cults with all the hype, pumping and lack of integrity!!LOL

>>WTF!!!

Can someone ban this guy?  Or at least disable his "bold" function?

[WaverleyStreet]

" copper is completely different than gold and bitcoin. gold isnt like most comodities because it doesnt really have an industrial use, only 10% of it is used in such a way. the price of gold is based on historical prices of gold in the context of the global econonomy. the historical price trends are used to predict future prices of gold, from which the current price is derived. there are mechanisms to valuing gold. you essentially value gold based on how you believe other people will perceive the importance of gold compared to other investments.

copper on the other hand is valued by its current and future industrial usage. its pretty easy to evaluate that. "



====>


Aztecs worked with both gold, copper and other precious metals-also they believed mushroom spores came from outer space..,,wait before i go in deep~if you are interested you might read this!!!LOL

http://www.scribd.com/doc/2815953/Refining-Precious-Metal-Wastes-C-M-Hoke


>>>HAVE FUN MELTING YOUR FACE OFF!!!

[btceic]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

go read up on the siriusxm fiasco, took them years to approve that effn merger.

[vokain]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

go read up on the siriusxm fiasco, took them years to approve that effn merger.

Did it take them years to approve because it was a fiasco, or vice versa

[btceic]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

go read up on the siriusxm fiasco, took them years to approve that effn merger.

Did it take them years to approve because it was a fiasco, or vice versa

it took them years to approve it because the sec and the doj are a joke.

[shibaji]

Pretty hilarious - I wonder how they are going to keep the regulatory filings up to date, and what sort of growth they project.

[Luckybit]

...Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

I agree. Once BTC gets more mainstream to these big money investors.. $260 will seem like 'back in the days when it was only $260'

$2600 is more like what we will see once the institutional investors get in.

[SoylentCreek]

...Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

I agree. Once BTC gets more mainstream to these big money investors.. $260 will seem like 'back in the days when it was only $260'

$2600 is more like what we will see once the institutional investors get in.

No! That's not how we do it. $260,000 per coin!

[WaverleyStreet]

...Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now. 260 usd/btc bubble top? We haven't seen nothing yet, mark my words.

I agree. Once BTC gets more mainstream to these big money investors.. $260 will seem like 'back in the days when it was only $260'

$2600 is more like what we will see once the institutional investors get in.

No! That's not how we do it. $260,000 per coin!

ya man ~ this $ 250,000 [MAX KEYSER SOZA] figure keeps some folks clicking on BTC faucets!!LOLl;)


>>EASY $$$!!!

[bigdude]

regardless of who is doing this ... the point is someone IS.

any news is good news for BTC

[Rampion]

does anyone know how long it will take the SEC to approve this and have them traded publicly? Is this done fast or does it take weeks/months?

weeks/month would be "fast".

[semaforo]

     If the etf makes any money others will quickly follow suit leading to a ridiculous rally.

[btceic]

This story is spreading, now on bloomberg tv headlines.

[broken_pixel]

Easy on that screenshot buddy! Can you maybe make it a bit larger? Its hard to see.

[btceic]

Easy on that screenshot buddy! Can you maybe make it a bit larger? Its hard to see.

no choice, uploaded from my iphone

[Foxpup]

     If the etf makes any money others will quickly follow suit leading to a ridiculous rally.

I'm not sure you understand how a trust works. The trust doesn't own bitcoins, it merely holds them. The shareholders own the bitcoins, even though they never actually hold them. All shares are fully backed by actual bitcoins held by the trust, and the trust can't issue shares if it doesn't have the bitcoins to back them. This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands, thereby avoiding a massive price crash (at least, that's the theory). Aside from the lack of a price crash, the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way (and anyone looking to sell less than 10 million dollars or so worth of bitcoins should do it the conventional way, rather than going to the ridiculous trouble of creating another ETF).

[DrGregMulhauser]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

[QuestionAuthority]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

So do you feel this is just a way for them to recover their money in a highly illiquid market? They could never sell enough Bitcoins to recover their investment so they create a fund?

[chufchuf]

And for every additional 50K units the trust issues, it has to buy 10K BTC on the open market. Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now.

where does it say that they have to keep buying BTC in the open market?

[DeathAndTaxes]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

So do you feel this is just a way for them to recover their money in a highly illiquid market? They could never sell enough Bitcoins to recover their investment so they create a fund?

What are you talking about? ETFs make money from management fees.  All ETFs make money from management fees.  It is the entire profit motive for running an ETF.  GLD for example has $38 billion and collects 0.4% in fees on that annually.  $38B * 0.4% = $150M annually.  Obviously this ETF is smaller but all ETF start small and has the potential to be much larger. 

[DeathAndTaxes]

And for every additional 50K units the trust issues, it has to buy 10K BTC on the open market. Once this works, resulting demand for BTC will be absolutely unimaginable for anyone involved in BTC trading right now.

where does it say that they have to keep buying BTC in the open market?

They don't have to but institutional investors will exploit it for arbitrage.  Say demand exceeds supply and while 1 share = 0.2 BTC the price rises above NAV and is trading at say 0.22 BTC per share (in USD equivelent).  An institutional investor would short 50,000 shares and deliver 10,000 BTC to the trustee.  The trustee would then add the 10,000 BTC to the trust, issue 50,000 new shares.  The investor then uses the new shares to cover the short and pockets 0.02 BTC per share * 50,000 = 100 BTC in a 0 risk arbitrage.

IT doesn't matter who buys the underlying asset, someone will if demand for the ETF shares exceeds supply.  This isn't a new concept.  For example physical bullion trusts have existed for over a decade.  The best known one is GLD.  The trust proposed by the  W twins is functionally identical to GLD except the underlying asset is Bitcoins not Gold Bullion.

[QuestionAuthority]

...This whole thing is merely a way for the trust to "sell" its massive collection of bitcoins without any bitcoins actually trading hands...the trust doesn't make any money that it wouldn't make by simply selling its bitcoins the conventional way...

Funds of this type are designed to generate revenue via management fees. The sponsor's fees and trust expenses are covered by the Bitcoins held in the trust itself. Thus the gradually decreasing net asset value (understood in BTC per share) cited in the filing, pp. 40-41; the same gradual process of NAV erosion also occurs in other commodity ETFs such as precious metal funds, etc.

So do you feel this is just a way for them to recover their money in a highly illiquid market? They could never sell enough Bitcoins to recover their investment so they create a fund?

What are you talking about? ETFs make money from management fees.  All ETFs make money from management fees.  It is the entire profit motive for running an ETF.  GLD for example has $38 billion and collects 0.4% in fees on that annually.  $38B * 0.4% = $150M annually.  Obviously this ETF is smaller but all ETF start small and has the potential to be much larger.  

That's what I'm asking DnT. First, let's pretend that not everyone that shows up at this forum is a Wall Street investor. Second, let's pretend that occasionally people ask questions here not because their trolling but to gain knowledge from people that can explain what's going on.

Now, let' s start again and I will try to be more accurate in the asking. Are the Winklevoss twins attempting to recover their money from creating a fund because if they sell a bunch of Bitcoins at a time they will crash the price or are they doing this because they really love Bitcoin and ultimately want it to succeed? Is this like a hedge against their investment?

[Damnsammit]

From numbers, they actually own 200,000 bitcoins, seems that all their coins went into this IPO

This article posted today, said that their initial investment was $11M but it is worth around "Oops, that’s about $8-million now." today.

So, at $8,000,000 by today's price (~$86 at time of article) we are looking at under 100,000 BTC.

Still a buttload of coins!

Edit:  http://www.theglobeandmail.com/report-on-business/top-business-stories/introducing-winklevoss-bitcoin-shares-if-you-cant-have-facebook/article12915664/

(Article I referenced)

[DeathAndTaxes]

Now, let' s start again and I will try to be more accurate in the asking. Are the Winklevoss twins attempting to recover their money from creating a fund because if they sell a bunch of Bitcoins at a time they will crash the price or are they doing this because they really love Bitcoin and ultimately want it to succeed? Is this like a hedge against their investment?

No offense intended I honestly didn't know what you were asking but it is a good question and one other people have asked in a variety of ways.

My guess (and this is just my guess) they are doing this to profit both directly from the fees generated by the ETF and indirectly by the benefit to Bitcoin in general.  If they simply wanted to unload 100K BTC they could do so much easier, cheaper, and quicker then then the huge regulatory expense of starting an ETF.  

The first reason is that regulators may simply not approve this ETF or they may require lots of back and forth and modification of the proposed financial insturment.   Second is that even once approved they need to find an exchange to list it and it is possible no exchange will or their first choice will decline (after some wasted months of underwritting) and they need to shop it to a second or third or fourth exchange.

Lastly 100K BTC is really not that much.  This is a very slow process.  Remember we are moving at the speed of government mixed with risk averse accountants with the added bonus of lawyers dealing with something totally new (and thus hard to provide firm legal guidance).  Honestly I would say 3-4 months is naively optimistic.  There is a real possibility it will take much longer given the novel first of its kind nature however lets say it takes them four months though.  That is 120 days.  If they wanted to unload that on MtGox that would only require selling 833 BTC a day for the next four months.

Once again simply my opinion but I see the motivation for the ETF as:
a) if Bitcoin becomes very big someday and the ETF is popular they will have first mover status.  They will be the GLD of Bitcoins and that is a license to print money.  Hell I will use it and I own physical Bitcoins.  Why?  Because I can use tax exempt money in my IRA or 401K to buy Bitcoins without taking a penalty to withdraw it from the IRA/401K.

b) it provides liquidity/access on a scale that MtGox simply can't handle.  A VC fund would be far more comfortable dealing in "paper Bitcoins" on the NASDAQ then wiring $10M to the Magic The Gathering Online exchange in Japan.

c) it is potentially bullish for Bitcoin in general and Bitcoin related enterprises.  The whole a rising tide lifts all ships.  They can profit indirectly in addition to the direct profits.

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.  If Bitcoin has a great year in 2014 (or 2015, or 2029) say up 500% the fund would post gains up 500%.  Imagine the news story and inverview on CNBC about the guys who brought you the best performing ETF on a year to date and 5 year basis.

Once again I caution this is just my opinion but it seems illogical they would go through all this simply to unload some coins. 

[Damnsammit]

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

That's an interesting side of it I never thought of... what a great way for them to be seen as the "guys who mainstreamed Bitcoin" and not "the crybabies who sued Facebook"

[DeathAndTaxes]

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

That's an interesting side of it I never thought of... what a great way for them to be seen as the "guys who mainstreamed Bitcoin" and not "the crybabies who sued Facebook"

Yeah I think it is a lesser consideration but it is important to remember people are people not wealth accumulating robots.  Motivations often have a very human element to it.

[Damnsammit]

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

That's an interesting side of it I never thought of... what a great way for them to be seen as the "guys who mainstreamed Bitcoin" and not "the crybabies who sued Facebook"

Yeah I think it is a lesser consideration but it is important to remember people are people not wealth accumulating robots.  Motivations often have a very human element to it.

As an NYSE trader, I would definitely be buying some shares of the ETF.  For some reason I just don't think it will get approved.

Hopefully I am wrong!

[QuestionAuthority]

Now, let' s start again and I will try to be more accurate in the asking. Are the Winklevoss twins attempting to recover their money from creating a fund because if they sell a bunch of Bitcoins at a time they will crash the price or are they doing this because they really love Bitcoin and ultimately want it to succeed? Is this like a hedge against their investment?

No offense intended I honestly didn't know what you were asking but it is a good question and one other people have asked in a variety of ways.

My guess (and this is just my guess) they are doing this to profit.  If they simply wanted to unload 100K BTC they could do so much easier, cheaper, and quicker then then the huge regulatory expense of starting an ETF.   First is that regulators may simply not approve this ETF or they may require lots of back and forth and modification of the proposed financial insturment.   Second they need to find an exchange to list it and it is possible no exchange will or their first choice will decline (after some months of underwritting) and they need to shop it to a second or third or fourth exchange.

Lastly 100K BTC is really not that much.  This is a very slow process.  We are talking 3-4 months at least and possibly much longer given the novel first of its kind nature.  Lets say it takes them four months though.  That is 120 days.  If they wanted to unload that on MtGox that would only require selling 833 BTC a day for the next four months.

Once again simply my opinion but I see the motivation as:
a) if Bitcoin becomes very big someday and the ETF is popular they will have first mover status.  They will be the GLD of Bitcoins and that is a license to print money.

b) it provides liquidity on a scale that MtGox simply can't handle.  A VC fund would be far more comfortable dealing in "paper Bitcoins" on the NASDAQ then wiring $10M to the Magic The Gathering Online exchange in Japan.

c) it is potentially bullish for Bitcoin in general and Bitcoin related enterprises.  The whole a rising tide lifts all ships.  They can profit indirectly in addition to the direct profits.

d) for better or worse their names are now tied to Bitcoin.  Don't underestimate egos.  If this thing hits big people on Wallstreet will remember who launched it, who bought coins when most people hadn't heard of Bitcoin, who "got it right" and laughed all the way to the wallet.dat.

Once again I caution this is just my speculation but it seems illogical they would go through all this simply to unload some coins.

Thank you that's a great explanation and I can now see that they are gambling their fate and rep on Bitcoin but if it pays off it pays off big. I never thought of it that way.

No offense taken. I trade Bitcoins at MtGox and BTCe and have made some money doing it but have no problem admitting that I'm a two year old Bitcoin noob and I've been very lucky so far. But I'm learning!

Can you answer my question from earlier in this thread. You probably missed it. Thanks.

[DeathAndTaxes]

This article posted today, said that their initial investment was $11M but it is worth around "Oops, that’s about $8-million now." today.

So, at $8,000,000 by today's price (~$86 at time of article) we are looking at under 100,000 BTC.

I believe that article is misquoting another article to a flawed conclusion.  In an interview the twins made a reference to purchasing there coins in the summer of 2012 and owned 1% of all Bitcoins.  I assume that meant 1% of coins minted to date (~11M) not all 21M coins but either way if the bought in summer of 2012 neither sum required an investment of $11M USD.  I don't believe they have ever indicated their actual purchase price but the exchange rate in Summer of 2012 ranged from ~$5 to ~$10 per BTC.

The author mixes up the value of an investment and the amount invested. At the time of the New York Times article, their holdings were reportedly WORTH $11M (110K BTC @ $100 ea?).    If we assume they didn't increase or liquidate their holdings it is worth less today then at the peak but it would still be up 800% or so in roughly a year.  I would say that is "not too bad".

Still the S-1 simply indicates the trust will have 200K BTC, issue 1 million shares (0.2 BTC initial NAV), and pre-IPO shares will be issued in baskets of 50,000 shares (10,000 BTC).  It is unclear what will fund the initial share sales.  The W twins might be using their 110,000 BTC, they might have more bought for this purpose, or they may be looking solely for outside capital to acquire BTC.  We may never know unless they decide to tell us.

[DeathAndTaxes]

As an NYSE trader, I would definitely be buying some shares of the ETF.  For some reason I just don't think it will get approved.

I fear you may be right.  Now I think a Bitcoin (or some future CC) ETF is an inevitability but I don't know if it will be this ETF at this time.  While structurally it is very similar to any physical commodity ETF the concept of a "virtual asset" is a huge jump for regulators (who generally are non-creative old men).

It may take a decade of failed attempts before one gets approved.  Then again lets hope they have friends in the right places.   I know if I (as a wallstreet outsider) tried to launch a fund like this the chance of approval would be 0.0%. 

[Damnsammit]

Why I don't think it will be approved...

From the S-1:

Risk Factors Related to the Regulation of the Trust and the Shares

The tax rules applicable to the Shares and the underlying Bitcoins held by the Trust are complex, and no statutory, judicial, or administrative authority directly addresses the characterization of an investment in Bitcoins. The tax consequences to an investor of an investment in the Shares could differ from the investor’s expectations. US Shareholders should refer to the section “United States Federal Income Tax Consequences” for more information.

Regulatory changes or actions may alter the nature of an investment in the Shares or restrict the use of Bitcoins or the operation of the Bitcoin Network in a manner that adversely affects an investment in the Shares.

Until recently, little or no regulatory attention has been directed toward Bitcoins and the Bitcoin Network by US federal and state governments, foreign governments and self-regulatory agencies. As Bitcoins have grown in popularity and in market size, certain US agencies (e.g., FinCEN) have begun to examine the operations of the Bitcoin Network, Bitcoin users and the Bitcoin Exchange Market. There is a possibility of future regulatory change altering, perhaps to a material extent, the nature of an investment in the Shares or the ability of the Trust to continue to operate.

Currently, neither the SEC nor the CFTC has formally asserted regulatory authority over the Bitcoin Network or Bitcoin trading and ownership. To the extent that Bitcoins are determined to be a security, commodity future or other regulated asset, or to the extent that a US or foreign government or quasi-governmental agency exerts regulatory authority over the Bitcoin Network or Bitcoin trading and ownership, trading or ownership in Bitcoins or the Shares may be adversely affected.

 
The point of BTC is to be unregulated, the point of the SEC is to regulate... although the ETF would be more legit than 95% of the OTC stocks out there, I can't see the SEC  approving an ETF that cannot be regulated.

[romerun]

[wachtwoord]

The point of BTC is to be unregulated, the point of the SEC is to regulate... although the ETF would be more legit than 95% of the OTC stocks out there, I can't see the SEC  approving an ETF that cannot be regulated.

The same can be said for gold.

[DeathAndTaxes]

@DnT

You mentioned that different agencies will likely define Bitcoin in different ways and I agree with you. What do you think the correct definition, or should I say most favorable definition, of Bitcoin is and do you see a way of presenting that definition to different departments (like a letter campaign) to help speed along the correct legal perception of Bitcoin?

Well that is complicated and I don't want to derail this thread.  The issue with FinCEN is that they took the easy way out and as a result created a regulatory mess.   Which of these doesn't fit.

Company trades Bullion for USD or USD for Bullion.   Buyer <---> Company
Company trades EUR for USD or USD for EUR.  Buyer <----> Company
Company trades BTC for USD or USD for BTC.  Buyer <----> Company
Company takes USD (or other monetary value) from Party A and at Party A direction delivers the USD (or other monetary value) to Party B.  Party A----> Company ----> Party B

All these are regulated activities but the first two are NOT money transmitters.  The first is Bullion Dealer and the second is a dealer in foreign exchange.  The lack of MT classification is great for these industries because MT is the most byzantine mess of conflicting state and federal regs.   The last example is a the classic Money Transmitter (think Western Union).  It is important to realize that generally speaking "payments" are not money transmission.  If your employer gives you a paycheck (or ACH) that is not money transmission.  If you use a bank wire to pay a bullion dealer who ships you some gold that is not money transmission.  If you make monthly contributions to your IRA by ACH withdrawal from your checking account to your brokerage account that is not money transmission.

Generally speaking money tranmission involves (not lawyer terms) "moving someone ELSES money".  If your employer uses a payroll company and provides funds and instructions (pay QA $10,000 monthly into this account) the Payroll company is a money transmitter.  If you take $500 cash to Western Union and "send" (although your money never moves) it to your friend in Virginia who picks it up at a WU location that is money transmission.  The $500 isn't WU it is yours, WU is just moving it for you.

Now look at the BTC example above.  I would argue trading/exchanging BTC for USD has more in common with trading/exchanging Gold for USD or trading/exchanging EUR for USD.  FinCEN however couldn't make it "fit" in those classifications.  Bullion dealers specifically name precious metals and Dealers in Foreign currency specifically define "foreign currency".

The only category that could possibly fit, in the sense of round peg and square hole but we have this sledgehammer is Money Transmitter.  Of course that opens up a nightmarish world of bureaucracy at the state level.  Honestly there is no worse classification.  It is cheaper and faster to form a new credit union (or buy an existing failing one) then becomes registered as MT in all states.

So I guess I answered what it shouldn't be.  The reality is no existing MSB laws properly cover what Bitcoin is.  In an optimal world regulators would have gone to congress and asked them to expand the scope of their authority to cover virtual currencies.  FinCEN then could either have expanded the "Dealer in Foreign Currency" category to also cover virtual currencies, "Dealer in Currency" or created an entirely new category (there are 6 classes of MSB, no reason it couldn't be 7).

For the record this is the approach that regulators in Canada have taken.  They indicated that no existing MSB regs cover Bitcoin brokers/traders/exchanges.  This isn't to say they don't see the new for regulation but rather the existing regs don't cover it and new regs will need to be written.

[Damnsammit]

The point of BTC is to be unregulated, the point of the SEC is to regulate... although the ETF would be more legit than 95% of the OTC stocks out there, I can't see the SEC  approving an ETF that cannot be regulated.

The same can be said for gold.

I understand the comparisons of BTC to gold, however, I don't think the SEC is going to see that comparison.

Furthermore, there is a precedent established with the exchange and value of precious metals that goes back long before the US Dollar was thought of... there is no precedent set for virtual coins on the NYSE.  (Edit: DnT explained it much better above )

Unless ummm... Facebook and Zynga credits, but those are only purchased with USD and cannot be withdrawn from the account.

[bitzox]

@DnT

That is a really succinct and easily understandable explanation of the state of regulatory affairs for FinCEN.  I followed the thread where you detailed your letter to them but I think your explanation here does a better job of summing up the situation. Thanks!

[QuestionAuthority]

Thanks. That's kind of depressing. It seems like the USA is just attempting to kill Bitcoin with as little effort as possible. They should at least give us a fighting chance to succeed or fail on the merits of the design.

[Chaoskampf]

I don't like this.

[CurbsideProphet]

The more I think about it, the more I feel this will be shot down as well.  FinCEN et al already sees Bitcoin as a good medium to launder money.  In order for this ETF to work, the regulators need to define Bitcoin as a commodity, not as a currency.  If Bitcoin is defined as a commodity then all the exchanges could argue that they are not MT's and render FinCEN essentially useless.  For obvious reasons I don't think this will be allowed.

However, as previously mentioned I still think some good can come out of all of this whether it succeeds or not as it will force regulators to make a much more transparent definition of just what they classify Bitcoin as.

[Damnsammit]

The USA will define Bitcoin just as soon as it figures out how to define marriage... so next decade? 

[BitTrade]

Title of thread is misleading. 

Also, this seems like it's simply an exit strategy for the winklevii more than anything.

[QuestionAuthority]

Title of thread is misleading.  

Also, this seems like it's simply an exit strategy for the winklevii more than anything.

No, that's what I thought too but DnT made a very good argument against that motivation. Read: If they wanted out they could simply cash out in roughly four months.

[Pompobit]

when their proposal will be accepted or rejected?

[cr1776]

There are no guarantees, but rough estimates would be 4-12 months - yes, it is a wide range and there does not seem to be a FedEx overnight type guarantee.  ;-)

With regard to the comments above, one can hope that the regulators do not coordinate and the SEC defines it as they will.  It is good to remember that very often the left hand does not know what the right hand is doing so it is a possibility.  Or, perhaps the SEC will disagree with FinCEN and interpret things differently. 

One can hope that either there is a turf war here or that the left and right hands do not coordinate.

when their proposal will be accepted or rejected?

[cypherdoc]

too many of you are being way too pessimistic about what the Winklevii are intending.

a couple of times over the last 2 yrs I myself have had discussions with other early adopters about developing an ETF.  not only to profit from management fees but to help drive the price of BTC.

getting an ETF thru the SEC will be a huge windfall for BTC and likely drive the price several orders of magnitude higher as it will open easy BTC investing to the masses in a regulated, accepted way.  IRA's, Keogh's, SEPS, retirement plans, and institutions of all kinds will now be opened up to invest in BTC.  this too was the whole premise of GLD and SLV.

the Winklevii are just doing more of their part to try and help Bitcoin while making a profit doing so.  their ultimate goal is not to sell their stash; it is to drive the value of their stash to the moon.

[klaus]

the Winklevii are just doing more of their part to try and help Bitcoin while making a profit doing so.  their ultimate goal is not to sell their stash; it is to drive the value of their stash to the moon.

+1

[2dogs]

Numerous ETFs are perfect for short positions.

Hopefully, calls/puts will be available also to hedge positions.

Will just have to see what is offered at what prices, then place bets.

[the founder]

I know I am the OP of this thread,  but I never really chimed in.

I want to point out the following in the most related ETF I can think of :  SLV

iShares Silver Trust (ETF)
NYSEARCA: SLV

Here are the general guidelines surrounding it:
Holdings: Physical Silver Bullion 100.00%

The Trust holds silver bullion and is designed to provide investors with a simple and cost-effective method to gain exposure to the price of silver.

http://us.ishares.com/product_info/fund/overview/SLV.htm

---

Substitute the words "silver" for 'bitcoin'  and you now know what this is.

If a billion dollars go into the bitcoin ETF,  making that 1% of all bitcoins worth a billion,  that means the total bitcoin marketcap is 100 billion if the plan is not to buy more bitcoins.   However most of these ETF's are fluid,  if that much money flows into it they need to make each of their shares worth 1/5 of a bitcoin.   They could mean that they will be buying large amounts of Bitcoins on the open market (or dumping them if they price goes down).

there are ways (I didn't quite understand how their filing addresses this)  but most ETF's allow for physical delivery.   I am unsure how they plan on addressing this,  if they plan on addressing it.

Another issue is the total amount of bitcoins they control,  if they do not increase it,  and money keeps pouring in (and they allow for physical deliver as most ETF's do)  then you now will see bitcoins worth 100k each or more.  

Not only are they going to be 'selling their bitcoins' to the investors ,  they will be making money on the transactions for life for 'managing' the fund.

You think mining fees are outrageous,  these guys just made the most powerful ASIC miner in history.    Every single transaction on that fund they will be making a profit from.

[Paladin69]

What would stop mega banks from naked short selling?

[vokain]

What would stop mega banks from naked short selling?

it's illegal

[Pajamaw]

Haha thank you laws

[vokain]

Haha thank you laws

http://online.wsj.com/article/SB10001424127887324904004578537692730996164.html

http://www.cato.org/sites/cato.org/files/serials/files/regulation/2008/2/v31n1-6.pdf
besides, it just means cheaper coins for us long run. if they sell too much, and lose money when they can't cover, that's a deterrant. It's illegal if they don't cover.

[DeathAndTaxes]

What would stop mega banks from naked short selling?

it's illegal

That has never stopped them before.  Also contrary to popular opinion naked short selling is NOT illegal in the US.  It likely should be.  There is no conceivable reason that entities are allowed to sell something they don't have but the SEC has NOT made naked short selling illegal.  Now there are rules which make certain activity illegal like naked short selling with the intent to artificially manipulate the price lower however the problem there is "intent".  What is the difference between short selling something because you believe it is overvalued and short selling it because you believe you can manipulate it downward.  On the ticker absolutely nothing and that provides entities which do it plausible deniability.  They are almost never prosecuted and barring a whistle blower it is almost impossible to prove the case even if they are.



However naked short selling an ETF which allows redemption to manipulate the price below NAV is a good way to simply lose a lot of money.  1 share = 0.2 BTC.  Now it will be traded in dollars but for simplicity I will use BTC pricing just remember it would be the BTC equivalent in USD.  The naked short seller inflates supply causing the ETF to fall below NAV.  Lets say it trades to 0.19 BTC per share (whatever that is in USD).  A large institutional investor could simply purchase 50,000 shares @0.19 BTC ea = 9,500 BTC.  The institutional investors then redeems the basket of 50,000 shares for 10,000 BTC.  The institutional investor who already has some "physical BTC" can execute both of these simultaneously and simply profit 500 BTC instantly.  Obviously this is a zero sum event so the amount of profit the redeemer makes is simply a transfer of wealth from the short seller.  One gains 500 BTC the other loses 500BTC.

Would you like to buy 10,000 BTC for 9,5000 BTC?  I know I sure would.  

[discopete]

Also known as how do you exit an illiquid market without destroying the price...

i have to agree.. this was my first thought when i saw the article too
a 200k sell on the current market would drive the price down but by doing it this way and creating demand from a new market if enough people bite it'll drive the price up just long enough for them to have turned all their BTC into cash

their 'company' will then be able to pay them wages/dividends and generally bleed down the value of BTC whilst only they benefit from it

it's a clever piece of latteral thinking, but not a good thing for a technology whose best outcome would be it stabalised into a currency

[vokain]

Also known as how do you exit an illiquid market without destroying the price...

i have to agree.. this was my first thought when i saw the article too
a 200k sell on the current market would drive the price down but by doing it this way and creating demand from a new market if enough people bite it'll drive the price up just long enough for them to have turned all their BTC into cash

their 'company' will then be able to pay them wages/dividends and generally bleed down the value of BTC whilst only they benefit from it

it's a clever piece of latteral thinking, but not a good thing for a technology whose best outcome would be it stabalised into a currency

It's a chicken and egg problem. If not enough people buy into it, then they're back to where they've started it. If people buy the entire trust, then that means Bitcoin already succeeded, and they've succeeded. Your proposition doesn't work

[cypherdoc]

Also known as how do you exit an illiquid market without destroying the price...

i have to agree.. this was my first thought when i saw the article too
a 200k sell on the current market would drive the price down but by doing it this way and creating demand from a new market if enough people bite it'll drive the price up just long enough for them to have turned all their BTC into cash

their 'company' will then be able to pay them wages/dividends and generally bleed down the value of BTC whilst only they benefit from it

it's a clever piece of latteral thinking, but not a good thing for a technology whose best outcome would be it stabalised into a currency

this ETF will be constructed to go out and buy new BTC, not sell the private stash of the Winklevii.  that would be illegal unless they plan on "donating" their BTC to the Trust, which I highly doubt.  so whatever investment fiat goes into buying shares will represent new demand.

[DeathAndTaxes]

i have to agree.. this was my first thought when i saw the article too
a 200k sell on the current market would drive the price down but by doing it this way and creating demand from a new market if enough people bite it'll drive the price up just long enough for them to have turned all their BTC into cash

Nonsense.  You do realize that registration, approval, underwriting, listing, and pre-IPO process is measured in month lots of months.

200K BTC over 6 months is 1,800 per day.
200K BTC over a year is 547 per day.

Far easier to just sell a "small" on the market each day then go through all this process plus you gain the added advantage of selling over a period of time and getting capital back quicker rather than waiting 6-12 months and selling it all at once (at potentially a much lower price).

their 'company' will then be able to pay them wages/dividends and generally bleed down the value of BTC whilst only they benefit from it. it's a clever piece of latteral thinking, but not a good thing for a technology whose best outcome would be it stabalised into a currency

I mean it is that hard to actually read the S-1 (publicly released).  It isn't a company it is an ETF and the Bitcoins are held by a trust.  0.2 BTC per share issued.  The trust can't spend any of those Bitcoins not a single Saotshi for anything... ever.   The trust simply keeps 0.2 BTC * the # of shares outstanding.  Nothing more, nothing less.

The sponsor (a company which is NOT going public) can charge a management fee but usually these are something like 0.4% so we are talking decades before any significant fraction of the coins in trust are "paid out".

The ETF may be a bad idea, it may not ever get approved, it might be downright silly but it would be the absolute worst possible way to sell 200K BTC.  I can't possibly think of a method with more cost, more legal complications, more chance of failure, more risk, and require more time.

[CurbsideProphet]

If the ETF is approved, then the regulators are basically saying that Bitcoin is a commodity and the Trust does not have to register as a money transmitter.  Doesn't this basically open the pandora's box for every exchange out there?  This seems like an easy rejection but surely the Winklevii must think they have a fairly decent shot at getting approval.  Either they're getting poor legal counsel or they see something that I do not.  I simply do not see FinCEN rolling over on this one.

[btceic]

Just wanted to chime in here regarding the time frames that people can expect for approval on this.

IMHO, this will take at least 1 year from today to get approved, there are so many issues, regulations, etc. that need to be dealt with, not the least of which are, fincen, irs, sec, doj and many more, unless and until the winklevii bribe "donate to" a ton of congressman and senators to get this through all of the red tape will this get the nod from those up on high to allow this to be on their nasdaq or nyse or amex exchange.

What we really need here is all of the VC's that are putting fiat behind their btc start-ups to really push this as hard as they can and call in all of their favors.

This may sound like I am pessimistic and perhaps I am but I would say I am cautiously optimistic.

[willphase]

This may sound like I am pessimistic and perhaps I am but I would say I am cautiously optimistic.

I think 1 year is definitely quite optimistic - I was thinking more like 18 months and then they say 'no'.

Will

[DeathAndTaxes]

If the ETF is approved, then the regulators are basically saying that Bitcoin is a commodity and the Trust does not have to register as a money transmitter.  Doesn't this basically open the pandora's box for every exchange out there?  This seems like an easy rejection but surely the Winklevii must think they have a fairly decent shot at getting approval.  Either they're getting poor legal counsel or they see something that I do not.  I simply do not see FinCEN rolling over on this one.

No it means nothing of the sort.  Regulations aren't mutually exclusive unless they specifically define an exclusion.

The SEC could approve this as a "virtual asset", the CFTC could say it is a "commodity" and FinCEN could still define it as "monetary value" (and thus MSB/MT provisions apply). Don't try to apply logic to the law it will make your head hurt.  If regulators try to impose conflicting regulation that defacto is IMPOSSIBLE to apply they will still each expect that you apply their regulation.  It is quite common for regulators to be utterly dysfunctional.  Your recourse is to file a lawsuit.

[btceic]

This may sound like I am pessimistic and perhaps I am but I would say I am cautiously optimistic.

I think 1 year is definitely quite optimistic - I was thinking more like 18 months and then they say 'no'.

Will

been through a few m&a cycles too, I presume?

[DrGregMulhauser]

I mean it is that hard to actually read the S-1 (publicly released).  It isn't a company it is an ETF and the Bitcoins are held by a trust.  0.2 BTC per share issued.  The trust can't spend any of those Bitcoins not a single Saotshi for anything... ever.   The trust simply keeps 0.2 BTC * the # of shares outstanding.  Nothing more, nothing less.

Just to clarify a little, this is incorrect. While the original ratio will be 0.2 BTC per share, that will decay over time, and the trust will spend a portion of those Bitcoins. There is nothing sinister or odd about this -- it is, on the contrary, common and entirely expected by investors.

As I mentioned earlier in this thread, the relevant passage is on pp. 40-41 of the filing:

https://bitcointalk.org/index.php?topic=248013.msg2636138#msg2636138

Specifically:

"The Trust will transfer Bitcoins to the Sponsor Custody Account in payment of the Sponsor’s Fee and transfer Bitcoins to the Trust Expense Account and sell Bitcoins to raise the funds needed for the payment of all Trust expenses not assumed by the Sponsor... As a result of the recurring transfers of Bitcoins to pay the Sponsor’s Fee and the Trust expenses not assumed by the Sponsor, the net asset value of the Trust (“NAV”) and, correspondingly, the fractional number of Bitcoins represented by each Share, will decrease over the life of the Trust."

Again, there is nothing in any way surprising about this.

[Rinorbirch]

I mean it is that hard to actually read the S-1 (publicly released).  It isn't a company it is an ETF and the Bitcoins are held by a trust.  0.2 BTC per share issued.  The trust can't spend any of those Bitcoins not a single Saotshi for anything... ever.   The trust simply keeps 0.2 BTC * the # of shares outstanding.  Nothing more, nothing less.

Just to clarify a little, this is incorrect. While the original ratio will be 0.2 BTC per share, that will decay over time, and the trust will spend a portion of those Bitcoins. There is nothing sinister or odd about this -- it is, on the contrary, common and entirely expected by investors.

As I mentioned earlier in this thread, the relevant passage is on pp. 40-41 of the filing:

https://bitcointalk.org/index.php?topic=248013.msg2636138#msg2636138

Specifically:

"The Trust will transfer Bitcoins to the Sponsor Custody Account in payment of the Sponsor’s Fee and transfer Bitcoins to the Trust Expense Account and sell Bitcoins to raise the funds needed for the payment of all Trust expenses not assumed by the Sponsor... As a result of the recurring transfers of Bitcoins to pay the Sponsor’s Fee and the Trust expenses not assumed by the Sponsor, the net asset value of the Trust (“NAV”) and, correspondingly, the fractional number of Bitcoins represented by each Share, will decrease over the life of the Trust."

Again, there is nothing in any way surprising about this.

+1

[Paladin69]

What would stop mega banks from naked short selling?

it's illegal

I don't think it's illegal.  A big stink was made in 2008 to try and make it illegal but it never happened.

[DeathAndTaxes]

Just to clarify a little, this is incorrect. While the original ratio will be 0.2 BTC per share, that will decay over time, and the trust will spend a portion of those Bitcoins. There is nothing sinister or odd about this -- it is, on the contrary, common and entirely expected by investors.

Agreed and I misunderstood although (possibly my reading of) your wording seems to indicate a sinister intent.

their 'company' will then be able to pay them wages/dividends and generally bleed down the value of BTC whilst only they benefit from it. it's a clever piece of latteral thinking, but not a good thing for a technology whose best outcome would be it stabalised into a currency

The company is able to bill the trust for the small management fee (unstated but 0.5% annually is a common amount) and the NAV will decline over time but I wouldn't call it "only they benefit".  If there is no benefit to shareholders (of the trust not the management company) then they won't buy it.  I mean it is an open market.  Investors will weigh the value/utility (if any) of the fund vs the cost (in terms of annual management fee).  They buy because the value outweighs the cost.

I would argue there is a lot of potential utility here:

* A company which had a margin brokerage account could accept BTC for goods and hedge volatility between time of acquiring and time of selling by selling short the fund.
* Speculators looking to go long could use margin to extend their leverage at lower cost and risk compared to systems like bitfinex.
* Long term holders of physical BTC (in cold storage) could sell covered calls against the fund for USD cashflow without needing to periodically sell off BTC on exchanges of unknown risk.
* Buying calls and puts would be a more sophisticated way of trading Bitcoins without dealing with entities of unknown trust.
* Someone looking to borrow BTC but sell them for USD could hedge out the currency risk partially or fully through the use of options.  If nothing else buying way out of the money calls would be a method of capping currency risk.

[vokain]

What would stop mega banks from naked short selling?

it's illegal

I don't think it's illegal.  A big stink was made in 2008 to try and make it illegal but it never happened.

Looking into it we have

http://en.wikipedia.org/wiki/Failure_to_deliver
http://en.wikipedia.org/wiki/Regulation_SHO#Regulation_SHO

I think failure to deliver is illegal already covered under some business law, contract law I imagine

On November 4, 2008, voters in South Dakota considered a ballot initiative, "The South Dakota Small Investor Protection Act", to end naked short selling in that state. The Securities Industry and Financial Markets Association of Washington and New York said they would take legal action if the measure passed.[45] The voters defeated the initiative.[46]

In July 2009, the SEC, under what the Wall Street Journal described as "intense political pressure," made permanent an interim rule that obliges brokerages to promptly buy or borrow securities when executing a short sale.[47] The SEC said that since the fall of 2008, abusive naked short selling had been reduced by 50%, and the number of threshold list securities (equity securities with too many "fails to deliver") declined from 582 in July 2008 to 63 in March 2009.[48][49]

In January 2010, Mary Schapiro, chairperson of the SEC, testified before the U.S. Financial Crisis Inquiry Commission, fails to deliver in equity securities has declined 63.4 percent, while persistent and large fails have declined 80.5 percent.

[btceic]

I think failure to deliver is illegal.

it may be illegal but it sure isn't enforced, sirixm has been dealing with this for years, and recently I learned that treasuries I think it was was getting fails to deliver as well.

Edit: yep, fails to deliver on treasuries...

http://www.zerohedge.com/news/2013-06-17/following-surge-fails-deliver-two-year-highs-treasury-market-finds-brief-respite

[vokain]

I think failure to deliver is illegal.

it may be illegal but it sure isn't enforced, sirixm has been dealing with this for years, and recently I learned that treasuries I think it was was getting fails to deliver as well.

Edit: yep, fails to deliver on treasuries...

http://www.zerohedge.com/news/2013-06-17/following-surge-fails-deliver-two-year-highs-treasury-market-finds-brief-respite

and no one holds them liable, even the asset holders? Seems like there would be a market opening for attorneys here.

[DeathAndTaxes]

I think failure to deliver is illegal already covered under some business law, contract law I imagine

Sadly failure to deliver is not illegal.  Reg SHO prohibits dealers from shorting unless they have borrowed the asset in question this ensures that it is impossible to fail to deliver (if you borrow the asset first and then short it, when settlement comes it is impossible to not be able to make delivery).  However Reg SHO provides plenty of exemptions, if you meet one of the exemptions then Reg SHO doesn't apply and you can naked short sell. If you can't deliver that is a contractual dispute but assuming your failure to deliver arises from being exempt from Reg SHO then you haven't broken the regs.  Even if your failure to deliver is the result of breaking Reg SHO the failure to deliver is simply how you got caught the violation occurred when the short was made in violation of Reg SHO (you didn't have the asset in hand when shorting).  If you break Reg SHO and borrow after the fact and thus are able to deliver you are still in violation it just likely means you won't get caught.

Don't try to apply logic like I said it will just make your head hurt. The regs "could" simply require everyone at all times and for all reasons always have the asset in hand before selling.  Period.  The fact that the regs aren't written that way and the SEC sees a 50% reduction in failure to deliver as a "win" (which still means hundreds of billions in failures to deliver) just shows the law was written the way the powers that be wanted it written.

[vokain]

I think failure to deliver is illegal already covered under some business law, contract law I imagine

Sadly failure to deliver is not illegal.  Reg SHO prohibits dealers from shorting unless they have borrowed the asset in question this ensures that it is impossible to fail to deliver (if you borrow the asset first and then short it, when settlement comes it is impossible to not deliver the asset).  However Reg SHO provides plenty of exemptions, if you meet one of the exemptions then Reg SHO doesn't apply and you can naked short sell. If you can't deliver that is a contractual dispute but assuming your failure to deliver arises from being exempt from Reg SHO then you haven't broken the regs.  Even if your failure to deliver is the result of breaking Reg SHO the failure to deliver is simply how you got caught the violation occurred when the short was made in violation of Reg SHO (you didn't have the asset in hand when shorting).  If you break Reg SHO and borrow after the fact and thus are able to deliver you are still in violation it just likely means you won't get caught.

Don't try to apply logic like I said it will just make your head hurt. The regs "could" simply require everyone at all times and for all reasons always have the asset in hand before selling.  Period.  The fact that the regs aren't written that way and the SEC sees a 50% reduction in failure to deliver as a "win" (which still means hundreds of billions in failures to deliver) just shows the law was written the way the powers that be wanted it written.

That's absolutely absurd. Why are bad laws and regs so hard to repeal??

[CurbsideProphet]

I think failure to deliver is illegal already covered under some business law, contract law I imagine

Sadly failure to deliver is not illegal.  Reg SHO prohibits dealers from shorting unless they have borrowed the asset in question this ensures that it is impossible to fail to deliver (if you borrow the asset first and then short it, when settlement comes it is impossible to not deliver the asset).  However Reg SHO provides plenty of exemptions, if you meet one of the exemptions then Reg SHO doesn't apply and you can naked short sell. If you can't deliver that is a contractual dispute but assuming your failure to deliver arises from being exempt from Reg SHO then you haven't broken the regs.  Even if your failure to deliver is the result of breaking Reg SHO the failure to deliver is simply how you got caught the violation occurred when the short was made in violation of Reg SHO (you didn't have the asset in hand when shorting).  If you break Reg SHO and borrow after the fact and thus are able to deliver you are still in violation it just likely means you won't get caught.

Don't try to apply logic like I said it will just make your head hurt. The regs "could" simply require everyone at all times and for all reasons always have the asset in hand before selling.  Period.  The fact that the regs aren't written that way and the SEC sees a 50% reduction in failure to deliver as a "win" (which still means hundreds of billions in failures to deliver) just shows the law was written the way the powers that be wanted it written.

That's absolutely absurd. Why are bad laws and regs so hard to repeal??

Because money talks and well, you know the rest...

[tabbek]

beware shameless plug 

http://betsofbitco.in/item?id=1685

The Winklevoss Bitcoin Trust will be approved by the SEC within 6 months.

[btceic]

11:41 am
Jul 5, 2013
A Q&A with Bitcoin Backer Tyler Winklevoss
http://blogs.wsj.com/moneybeat/2013/07/05/a-qa-with-bitcoin-backer-tyler-winklevoss/

Cameron and Tyler Winklevoss, the twins best known for their role in the history of Facebook, have had their fair share of headlines this week. The reason, of course, is their plan to come to market with an exchange-traded product giving  investors exposure to Bitcoin, a virtual currency that exists outside the realms of governments and central banks.

They filed with the U.S. Securities and Exchange Commission for a public listing of the Winklevoss Bitcoin Trust with a proposed valuation of $20m.

The value of the Bitcoin market has fluctuated in recent months but is currently valued at around $1bn. The Winklevoss twins say they own about 1% of the total Bitcoin stock.

There are risks, there is more than a little intrigue.

Tyler Winklevoss discussed the trust, its target market and potential future projects with sister title Financial News.

Financial News: Who is your target market? Who will buy this type of exchange-traded fund and why?

Tyler Winklevoss: Anyone who can’t get exposure to Bitcoin — such as pension funds —- or anyone who doesn’t want to go through the hassle of buying or physically storing it, such as mainstream retail investors. The best metaphor is to compare it to gold. How many people actually directly buy and hold gold bars? The gold ETCs [exchange-traded commodities] made it possible for investors to do that indirectly.

FN: Will the SEC approve this and when?

TW: It’s the first-ever digital math-based asset ETP [exchange-traded product], so it represents a whole new frontier. We haven’t talked with the SEC yet, but we think that, in this situation, they are likely to have more questions than they might for something that’s been done before.

FN: Who will be the lead market makers and authorized participants?

TW: It’s too early to say, but it is likely to be the usual suspects of banks, broker dealers and market makers.

FN: Who will trade the ETF?

TW: When the time comes, we will consider the benefits of the NYSE, Nasdaq and other exchanges.

FN: Who will prove there is liquidity and there is inventory backing the ETF?

TW: We think that there will be demand for frictionless exposure to Bitcoin and hopefully this demand will translate to authorized participants.

FN: How will you prove that the holdings are secure?

TW: We will provide more information regarding our security system and vaulting in an amendment to our registration statement. We have put substantial time into the issue and have developed new mechanisms for security and storage and have submitted a patent application for them. The onus will fall on us to explain eloquently why the Bitcoin in our trust is secure.

FN: You have 18 pages of risk factors associated with this offering. Are you already addressing investor concerns?

TW: We want to be incredibly transparent and allow people to know exactly what they’re getting into. That means putting the risks of both Bitcoin and the trust structure out there for people to read themselves.

FN: Are you planning to address that ‘lost key’ issue? [There is no password reset mechanism for the Bitcoin network. The risk factors warn that “the loss or destruction of a private key required to access a Bitcoin may be irreversible”.]

TW: The lost key mirrors the idea of losing your wallet in the middle of the night. The security system we’ve developed will address that issue and limit that risk.

FN: Are you worried that the US might legislate against Bitcoin? For example, by declaring that it is illegal for companies to process payments with a known Bitcoin agent?

TW: It doesn’t look like any regulator is trying to outlaw Bitcoin. They are looking to bring healthy and reasonable regulation, which I’m in favor of. Regulation can help bring Bitcoin into the mainstream without taking away the characteristics which attract people to it.

FN: How is Bitcoin Trust different from Exante? [a Bitcoin hedge fund run out of Malta]

TW: The trust is very different from Exante because Exante is a hedge fund and won’t be listed or regulated by the SEC. You can’t invest in Exante through an e-trade account. We want the trust to be the first Bitcoin exchange-traded product available to investors in the public market. Buying a share of the trust should be as easy as buying a share of common stock of any publicly listed company.”

FN: What’s the next project?

TW: We try to identify great entrepreneurs in young companies. Our focus has shifted to entrants in the Bitcoin space, but that doesn’t exclude other sectors. There is still a lot to come in the Bitcoin space, so I wouldn’t be surprised if our next investment or thing had a lot to do with it. Our best way of sourcing deals is through our real-life social network of friends, investors and entrepreneurs.

[coinprize]

My site is betting bitcoins on Nasdaq: http://coinprize.com

[Come-from-Beyond]

Breaking news

Aye. Bitcoin + Trust, sounds breaking... the initial idea of Satoshi.

[Ira H. Fuchs]

Just to clarify a little, this is incorrect. While the original ratio will be 0.2 BTC per share, that will decay over time, and the trust will spend a portion of those Bitcoins. There is nothing sinister or odd about this -- it is, on the contrary, common and entirely expected by investors.

Agreed and I misunderstood although (possibly my reading of) your wording seems to indicate a sinister intent.

their 'company' will then be able to pay them wages/dividends and generally bleed down the value of BTC whilst only they benefit from it. it's a clever piece of latteral thinking, but not a good thing for a technology whose best outcome would be it stabalised into a currency

The company is able to bill the trust for the small management fee (unstated but 0.5% annually is a common amount) and the NAV will decline over time but I wouldn't call it "only they benefit".  If there is no benefit to shareholders (of the trust not the management company) then they won't buy it.  I mean it is an open market.  Investors will weigh the value/utility (if any) of the fund vs the cost (in terms of annual management fee).  They buy because the value outweighs the cost.

I would argue there is a lot of potential utility here:

* A company which had a margin brokerage account could accept BTC for goods and hedge volatility between time of acquiring and time of selling by selling short the fund.
* Speculators looking to go long could use margin to extend their leverage at lower cost and risk compared to systems like bitfinex.
* Long term holders of physical BTC (in cold storage) could sell covered calls against the fund for USD cashflow without needing to periodically sell off BTC on exchanges of unknown risk.
* Buying calls and puts would be a more sophisticated way of trading Bitcoins without dealing with entities of unknown trust.
* Someone looking to borrow BTC but sell them for USD could hedge out the currency risk partially or fully through the use of options.  If nothing else buying way out of the money calls would be a method of capping currency risk.

Our members' abilities to provide direct, access-related services beyond their institutional walls are inevitably limited. However, we can collaborate with other institutions to ensure that no gaps in our access services are left unfilled; we can be sensitive to access restrictions that may be hindering portions of our current or prospective campus populations and can work to overcome those hindrances; and we can support government and private efforts to expand effective access. We are connected to the growing knowledge economy...Ira