Winklevoss Bitcoin Trust on Bloomberg

[windjc]

What this fund, if its is approved, offers more than anything is legitimacy in the financial markets. It offers a place for hedge fund and other managers to put a small position of their multi-billion dollar accounts without worrying about being seen as mavericks or crazies.

It will also be a place were mom and pop investors can put some of their monies.

The implications of this are huge, because if this happens, BTC will go from being the random odd fun story on CNBC to something that is  considered REAL and here to stay.

I am not saying BTC will be immediately popular or respected, but it would be considered a member (albiet perhaps black sheep) of the financial community.

[notme]

Someone please explain this to me, because I clearly don't get it -

How can an actual pump-and-dump scheme be possible on BTC?

If a trust is pumped with $$$ therefore pumping up BTC, what happens when everyone sells? Fund still has same amount of $$$, so only early jumpers actually get to see their gains, and rest are left dry.

Why would _anyone_ try to pump-and-dump given then when the dump arrives, there's a high chance of the money simply vanishing into thin air?

The fund does not have $$$.  The fund has BTC that they bought with investor funds.  However, the effect is the same.  Only those who sell before the pop and those who bought low will retain their wealth.

[SheHadMANHands]

Am I missing something, or is there really no news?  It's a blank screen, still awaiting the "approval" or whatever.

[windjc]

Am I missing something, or is there really no news?  It's a blank screen, still awaiting the "approval" or whatever.

Well, I guess the only news is that they filed and then it was sent back to them to add some more legal explanations, which they did, and it seems like the ETF approval is going through the normal stages. What this means is that it is not dead in the water and its optimistic that progress is being made. The fact that Bloomberg has a spot ready for the EFT if approved is visually optimistic, although I would doubt - could be wrong - that this really has anything to do with final approval. However, while some laughed the ETF off as not standing a chance of approval, it seems that is not the case. And that, in my opinion, is great news.

[cypherdoc]

Am I missing something, or is there really no news?  It's a blank screen, still awaiting the "approval" or whatever.

Well, I guess the only news is that they filed and then it was sent back to them to add some more legal explanations, which they did, and it seems like the ETF approval is going through the normal stages. What this means is that it is not dead in the water and its optimistic that progress is being made. The fact that Bloomberg has a spot ready for the EFT if approved is visually optimistic, although I would doubt - could be wrong - that this really has nothing to do with final approval. However, while some laughed the ETF off as not standing a chance of approval, it seems that is not the case. And that, in my opinion, is great news.

good interpretation.

[Keyser Soze]

Pretty sure it is just a placeholder since the ETF is still going through the approval process.

[bassclef]

Here's a copy of the filing.

http://www.sec.gov/Archives/edgar/data/1579346/000119312513393903/d562329ds1a.htm

[vpitcher07]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

[windjc]

I do not have much experience with these type of documents but I find it interesting the following language in the proposal. I do not think this is typical verbage on most ETF applications, although I could be wrong. It seems to spell some of the future obstacles for Bitcoin in the U.S.

But it also shows you what it may mean if an ETF is approved and remains alive going forward:

    The Trustee will terminate and liquidate the Trust if one of the following events occurs:

•      the Trustee is notified that the Shares are delisted from the [EXCHANGE] and are not approved for listing on another national securities exchange within five business days of their delisting;

•      Shareholders acting in respect of at least 75 percent of the outstanding Shares notify the Trustee that they elect to terminate the Trust;

•     60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign and a successor trustee has not been appointed and accepted its appointment

•    the SEC determines that the Trust is an investment company under the Investment Company Act of 1940 and the Trustee has actual knowledge of that determination;

•     the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act of 1936, as amended (“CEA”), and the Trustee receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

•     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;


•     the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for US federal income tax purposes, and the Trustee receives notice from the Sponsor that the Sponsor determines that, because of that tax treatment or change in tax treatment, termination of the Trust is advisable;

•     a United States regulator requires the Trust to shut down or forces the Trust to liquidate its Bitcoins;

•     the aggregate market capitalization of the Trust, based on the closing price of the Shares, was less than $[    ] million (as adjusted for inflation by reference to the US Consumer Price Index) at any time after the first anniversary of the Trust’s formation and the Trustee receives, within six months after the last trading date on which the aggregate market capitalization of the Trust was less than $[    ] million, notice from the Sponsor of its decision to terminate the Trust;
   
•     60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository that is willing to act in such capacity; or

•     the Trustee elects to terminate the Trust after the Sponsor is conclusively deemed to have resigned effective immediately as a result of the Sponsor being adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property being appointed, or a trustee or liquidator or any public officer taking charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation.

 [/i]

[greaterninja]

This means that if this fund is SEC approved, the bitcoin market will quadruple in less than a month.  The market will hit several billion dollars of worth.  BTC prices will sky rocket.

How is the SEC going to regulate earnings, fraud, and tax free cashouts, etc?

[windjc]

This means that if this fund is SEC approved, the bitcoin market will quadruple in less than a month.  The market will hit several billion dollars of worth.  BTC prices will sky rocket.

How is the SEC going to regulate earnings, fraud, and tax free cashouts, etc?

There are no tax free cashouts in an ETF. No anonymity.

[adamstgBit]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

I think its more like you're buying a share in Winklevoss's 1% stake in bitcoin.
the Winklevoss hold the bitcoin, and say that these shares are as good as the real thing, and poeple trade the shares not the bitcoins.
poeple believe that these shares are as good as the real thing, so in theory they will follow BTC price very closely.


can you actually get BTC out of this trust?
no i would think not. $ in $ out.

so why do poeple believe its as good as the real thing?
idk!

[windjc]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

I think its more like you're buying a share in Winklevoss's 1% stake in bitcoin.
the Winklevoss hold the bitcoin, and say that these shares are as good as the real thing, and poeple trade the shares not the bitcoins.
poeple believe that these shares are as good as the real thing, so in theory they will follow BTC price very closely.


can you actually get BTC out of this trust?
no i would think not. $ in $ out.

so why do poeple believe its as good as the real thing?
idk!

Actually, the shares can act as sort of an exchange. If money comes in those shares can start to be worth more than the current rate of BTC and thus potentially drive the price of BTC upwards. I believe this has happened with some of the larger precious metal ETFs.

[theonewhowaskazu]

I do not have much experience with these type of documents but I find it interesting the following language in the proposal. I do not think this is typical verbage on most ETF applications, although I could be wrong. It seems to spell some of the future obstacles for Bitcoin in the U.S.

But it also shows you what it may mean if an ETF is approved and remains alive going forward:

    The Trustee will terminate and liquidate the Trust if one of the following events occurs:

•      the Trustee is notified that the Shares are delisted from the [EXCHANGE] and are not approved for listing on another national securities exchange within five business days of their delisting;

•      Shareholders acting in respect of at least 75 percent of the outstanding Shares notify the Trustee that they elect to terminate the Trust;

•     60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign and a successor trustee has not been appointed and accepted its appointment

•    the SEC determines that the Trust is an investment company under the Investment Company Act of 1940 and the Trustee has actual knowledge of that determination;

•     the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act of 1936, as amended (“CEA”), and the Trustee receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

•     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;


•     the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for US federal income tax purposes, and the Trustee receives notice from the Sponsor that the Sponsor determines that, because of that tax treatment or change in tax treatment, termination of the Trust is advisable;

•     a United States regulator requires the Trust to shut down or forces the Trust to liquidate its Bitcoins;

•     the aggregate market capitalization of the Trust, based on the closing price of the Shares, was less than $[    ] million (as adjusted for inflation by reference to the US Consumer Price Index) at any time after the first anniversary of the Trust’s formation and the Trustee receives, within six months after the last trading date on which the aggregate market capitalization of the Trust was less than $[    ] million, notice from the Sponsor of its decision to terminate the Trust;
   
•     60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository that is willing to act in such capacity; or

•     the Trustee elects to terminate the Trust after the Sponsor is conclusively deemed to have resigned effective immediately as a result of the Sponsor being adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property being appointed, or a trustee or liquidator or any public officer taking charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation.

 [/i]

Do you know if they provided any conditions as to when the ETF will be launched?

[derpinheimer]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

I think its more like you're buying a share in Winklevoss's 1% stake in bitcoin.
the Winklevoss hold the bitcoin, and say that these shares are as good as the real thing, and poeple trade the shares not the bitcoins.
poeple believe that these shares are as good as the real thing, so in theory they will follow BTC price very closely.


can you actually get BTC out of this trust?
no i would think not. $ in $ out.

so why do poeple believe its as good as the real thing?
idk!

So basically even if every single "share" of their bitcoin was bought, not a single coin would be bought on the market? All the Winklevoss gains are from fees?

[windjc]

I do not have much experience with these type of documents but I find it interesting the following language in the proposal. I do not think this is typical verbage on most ETF applications, although I could be wrong. It seems to spell some of the future obstacles for Bitcoin in the U.S.

But it also shows you what it may mean if an ETF is approved and remains alive going forward:

    The Trustee will terminate and liquidate the Trust if one of the following events occurs:

•      the Trustee is notified that the Shares are delisted from the [EXCHANGE] and are not approved for listing on another national securities exchange within five business days of their delisting;

•      Shareholders acting in respect of at least 75 percent of the outstanding Shares notify the Trustee that they elect to terminate the Trust;

•     60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign and a successor trustee has not been appointed and accepted its appointment

•    the SEC determines that the Trust is an investment company under the Investment Company Act of 1940 and the Trustee has actual knowledge of that determination;

•     the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act of 1936, as amended (“CEA”), and the Trustee receives notice from the Sponsor that, because of that determination, termination of the Trust is advisable;

•     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;


•     the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for US federal income tax purposes, and the Trustee receives notice from the Sponsor that the Sponsor determines that, because of that tax treatment or change in tax treatment, termination of the Trust is advisable;

•     a United States regulator requires the Trust to shut down or forces the Trust to liquidate its Bitcoins;

•     the aggregate market capitalization of the Trust, based on the closing price of the Shares, was less than $[    ] million (as adjusted for inflation by reference to the US Consumer Price Index) at any time after the first anniversary of the Trust’s formation and the Trustee receives, within six months after the last trading date on which the aggregate market capitalization of the Trust was less than $[    ] million, notice from the Sponsor of its decision to terminate the Trust;
   
•     60 days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository that is willing to act in such capacity; or

•     the Trustee elects to terminate the Trust after the Sponsor is conclusively deemed to have resigned effective immediately as a result of the Sponsor being adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property being appointed, or a trustee or liquidator or any public officer taking charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation.

 [/i]

Do you know if they provided any conditions as to when the ETF will be launched?

When asked in London a few weeks ago, the Winklevoss' said 6 months. Then paused and said maybe 12. I think they are trying to be conservative in their estimates.

[Nemesis]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

I think its more like you're buying a share in Winklevoss's 1% stake in bitcoin.
the Winklevoss hold the bitcoin, and say that these shares are as good as the real thing, and poeple trade the shares not the bitcoins.
poeple believe that these shares are as good as the real thing, so in theory they will follow BTC price very closely.


can you actually get BTC out of this trust?
no i would think not. $ in $ out.

so why do poeple believe its as good as the real thing?
idk!

So basically even if every single "share" of their bitcoin was bought, not a single coin would be bought on the market? All the Winklevoss gains are from fees?

In other words of some other words, its the way they can dump their coins without crashing the market.

[ruletheworld]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

I think its more like you're buying a share in Winklevoss's 1% stake in bitcoin.
the Winklevoss hold the bitcoin, and say that these shares are as good as the real thing, and poeple trade the shares not the bitcoins.
poeple believe that these shares are as good as the real thing, so in theory they will follow BTC price very closely.


can you actually get BTC out of this trust?
no i would think not. $ in $ out.

so why do poeple believe its as good as the real thing?
idk!

So basically even if every single "share" of their bitcoin was bought, not a single coin would be bought on the market? All the Winklevoss gains are from fees?

Yup. They hold the underlying in a secure wallet and sell out 'shares' of ETFs. The advantage is that funds that have specific mandates can invest in Bitcoin indirectly - you can't have a pension fund manager buy Bitcoin with his client's funds but she can buy a Bitcoin ETF.

[windjc]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

I think its more like you're buying a share in Winklevoss's 1% stake in bitcoin.
the Winklevoss hold the bitcoin, and say that these shares are as good as the real thing, and poeple trade the shares not the bitcoins.
poeple believe that these shares are as good as the real thing, so in theory they will follow BTC price very closely.


can you actually get BTC out of this trust?
no i would think not. $ in $ out.

so why do poeple believe its as good as the real thing?
idk!

So basically even if every single "share" of their bitcoin was bought, not a single coin would be bought on the market? All the Winklevoss gains are from fees?

No, as more $$ comes in they have to buy more BTC to fill more "baskets."

[adamstgBit]

So basically you are buying futures in bitcoin when you buy this stock? I don't understand how this works.

I think its more like you're buying a share in Winklevoss's 1% stake in bitcoin.
the Winklevoss hold the bitcoin, and say that these shares are as good as the real thing, and poeple trade the shares not the bitcoins.
poeple believe that these shares are as good as the real thing, so in theory they will follow BTC price very closely.


can you actually get BTC out of this trust?
no i would think not. $ in $ out.

so why do poeple believe its as good as the real thing?
idk!

So basically even if every single "share" of their bitcoin was bought, not a single coin would be bought on the market? All the Winklevoss gains are from fees?

Winklevoss are selling their coins in the form of shares. they stand to gain from fees and the selling of the shares.
These ETFs can be viewed as HUGE ask walls that constantly move with price.