GBTC Bitcoin Investment Trust Observer

[phoenix1]

In the short term, since it was easier to get the BIT into a tax deferred retirement account, the fees are probably worth it.

Long term, if bitcoin takes off, there will no doubt be competition, and COIN / other investment vehicles will pop up with lower fees.  And since it is in a tax-deferred account, David will be able to roll into one of those investments without taking a capital gain hit.

I hear you. Over time if more of these vehicles are created, fees will drop. I read somewhere that fees on some ETF's are as low as 0.04%. Makes this one seem even more extortionate. And I would imagine COIN will not be in a hurry to undercut GBIT by very much, if at all, given they will be a genuine ETF.
We will need a lot more competition than that to see fees drop significantly IMO.

Interesting to hear that he could 'roll' between them without penalties. I have no knowledge of any of these rules.
How does the tax deferral of a retirement account work? If it is just a deferral, is any CGT paid at the same rate at the end of the day? Or is there some tax relief too?

There are two general types.  One a 401k or simple IRA, allows you to invest a certain amount of income, and that investment is not considered earnings or otherwise taxed (meaning you can invest more upfront).  The investment then grows without taxes, capital gains or dividends.  When you reach the qualifying age and withdraw the money, it is taxed as ordinary income.  But, ideally you are in a lower tax bracket as you are retired.

Roth IRAs let you invest after tax income, but then distributions are not taxed.

Lots of other details.

Thanks for the reply - yeh, I am sure there are loads of other details lol , but I think I understand the basic differences now

Can a BTC 'ETF' be part of either or just the Roth?

[Chef Ramsay]

In the short term, since it was easier to get the BIT into a tax deferred retirement account, the fees are probably worth it.

Long term, if bitcoin takes off, there will no doubt be competition, and COIN / other investment vehicles will pop up with lower fees.  And since it is in a tax-deferred account, David will be able to roll into one of those investments without taking a capital gain hit.

I hear you. Over time if more of these vehicles are created, fees will drop. I read somewhere that fees on some ETF's are as low as 0.04%. Makes this one seem even more extortionate. And I would imagine COIN will not be in a hurry to undercut GBIT by very much, if at all, given they will be a genuine ETF.
We will need a lot more competition than that to see fees drop significantly IMO.

Interesting to hear that he could 'roll' between them without penalties. I have no knowledge of any of these rules.
How does the tax deferral of a retirement account work? If it is just a deferral, is any CGT paid at the same rate at the end of the day? Or is there some tax relief too?

There are two general types.  One a 401k or simple IRA, allows you to invest a certain amount of income, and that investment is not considered earnings or otherwise taxed (meaning you can invest more upfront).  The investment then grows without taxes, capital gains or dividends.  When you reach the qualifying age and withdraw the money, it is taxed as ordinary income.  But, ideally you are in a lower tax bracket as you are retired.

Roth IRAs let you invest after tax income, but then distributions are not taxed.

Lots of other details.

Which is subject to change when they run out of money to tap into and subsequently come for pensions and 401Ks to nationalize. Or, the market just collapses and you're wiped out either way.

[phoenix1]

Which is subject to change when they run out of money to tap into and subsequently come for pensions and 401Ks to nationalize. Or, the market just collapses and you're wiped out either way.

Lol !! You cynic you !!
But you're probably right - pension fund raids have been done before and they will be done again ...  
Which makes someone else holding BTC in a fund for you seem even more risky, and all the while you pay them a nice chunk for their efforts ...

[Mayer Amschel]

The prices should go over 300 soon.

- Mayer Amschel

[BitcoinIsLiberty]

http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

[coinableS]

http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

Except COIN would be way more liquid as a true ETF instead of the trust that Barry hacked together to squeeze into the markets. Once both are available through major markets I'm pretty certain that most people would choose to trade COIN over GBTC. Time will tell!

[JorgeStolfi]

http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

It is not just a bureaucratic process. The SEC has to decide whether they will allow the fund to be traded or not.  It is not surprising that the SEC is still undecided, because it is the first fund whose only backing asset is a virtual currency with no backing asset.

If BIT can convince the SEC that they are better than COIN in some relevant sense, I suppose that they could be approved before COIN.  Or, even, BIT may be approved and COIN denied, or vice-versa.

[coinableS]

I have a feeling that the SEC has already put their stamp of approval on COIN behind closed doors. What are they waiting for is the question. They approved a singapore corporation to open an exchange in NY (itbit). I believe they are waiting for Lawksy's office to role out the bit license before announcing that COIN is approved.

[bobabouey2]

http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

Except COIN would be way more liquid as a true ETF instead of the trust that Barry hacked together to squeeze into the markets. Once both are available through major markets I'm pretty certain that most people would choose to trade COIN over GBTC. Time will tell!

Not necessarily.  Both entities use trusts.  GBTC has the same method of issuing / redeeming shares via baskets and authorized participants as COIN.  It just doesn't work now because of the one year holding period.  If they can get SEC registered, that problem goes away.  And COIN has not yet disclosed what its fees are, at least on the latest S-1A.

So the end game could be the same, but in the meantime, Barry managed to hack together a solution that at least gets something trading.

[JorgeStolfi]

I have a feeling that the SEC has already put their stamp of approval on COIN behind closed doors. What are they waiting for is the question. They approved a singapore corporation to open an exchange in NY (itbit). I believe they are waiting for Lawksy's office to role out the bit license before announcing that COIN is approved.

ItBit is not an ETF, it is a completely different business.  AFAIK, SEC's involvement in their approval process was minimal; its was Lawsky himself who signed their charter to operate as a "Trust" (seemingly an "almost a bank" thing).

[billyjoeallen]

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

[gotmilk_]

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

Maybe they do... We will see on 30. May when Grayscale updates info about the shares Still, new shares are locked for another year.

[bobabouey2]

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

Technically, its not the ETF that does that, it is the authorized participants.  If the price is above NAV, they will buy baskets of new shares from the ETF and sell them, hence more supply and the price should fall.  If below NAV, they will buy shares below NAV and redeem baskets which reduces supply.

GBTC has that mechanism.  However, currently only shares that have been outstanding for a year may be sold on OTC.  So in practice, it doesn't work.  They are saying they will pursue full SEC registration, at which point, it could.

I give Barry credit for being nimble and "hacking" something that is publicly tradeable first, even if it currently has limitations.

[JorgeStolfi]

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

Technically, its not the ETF that does that, it is the authorized participants.  If the price is above NAV, they will buy baskets of new shares from the ETF and sell them, hence more supply and the price should fall.  If below NAV, they will buy shares below NAV and redeem baskets which reduces supply.

In the case of BIT at least, it is the authorized participants who buy the bitcoins and give them to Grayscale in exchange for BIT shares, at the fixed ~1:10 rate.  The reverse is the case when shares are redeemed.

I give Barry credit for being nimble and "hacking" something that is publicly tradeable first, even if it currently has limitations.

Not sure about the "nimble" part... When the fund started, they had promised an open market by Q2 2014.  (And the minimum holding period was only 6 months.)

Fortune, Dan Primack,  2013-09-26
http://fortune.com/2013/09/26/first-bitcoin-investment-fund-launches/

Bitcoin Investment Trust plans to spend the first several months in asset-gathering mode, and will open up the secondary markets for trading six months after launch.

[bobabouey2]

Not sure about the "nimble" part... When the fund started, they had promised an open market by Q2 2014.  (And the minimum holding period was only 6 months.)

Fortune, Dan Primack,  2013-09-26
http://fortune.com/2013/09/26/first-bitcoin-investment-fund-launches/

Bitcoin Investment Trust plans to spend the first several months in asset-gathering mode, and will open up the secondary markets for trading six months after launch.

Nimble compared to COIN.  That was the context of the discussion.

And I think you are misconstruing that quote. 

First, it doesn't say "minimum holding period" of 6 months.  It say they planned to open up "secondary markets" for trading six months after launch.   

Second, secondary markets does not mean "open" market, which I'm assuming you take as equal to a "public" market.  Long before bitcoin, Second Market got its start serving as a way for people to trade non-public securities.  I.e. owners of Facebook stock before it went public, that were acquired either in VC rounds or via employee grants.  It required purchasers to be accredited investors, and thus the transactions were exempt from requiring an SEC approved registration statement.

[JorgeStolfi]

Not sure about the "nimble" part... When the fund started, they had promised an open market by Q2 2014.  (And the minimum holding period was only 6 months.)

Fortune, Dan Primack,  2013-09-26
http://fortune.com/2013/09/26/first-bitcoin-investment-fund-launches/

Bitcoin Investment Trust plans to spend the first several months in asset-gathering mode, and will open up the secondary markets for trading six months after launch.

And I think you are misconstruing that quote.  

First, it doesn't say "minimum holding period" of 6 months.  It say they planned to open up "secondary markets" for trading six months after launch.  

Second, secondary markets does not mean "open" market, which I'm assuming you take as equal to a "public" market.  Long before bitcoin, Second Market got its start serving as a way for people to trade non-public securities.  I.e. owners of Facebook stock before it went public, that were acquired either in VC rounds or via employee grants.  It required purchasers to be accredited investors, and thus the transactions were exempt from requiring an SEC approved registration statement.

There may be nuances that escape me, but I remember reading such from the documents on their website.  The clients could not redeem or sell their shares to other people before 6 months, and after that they would be allowed to trade them in a specific market, that had been promised for Q1 or Q2 2014.  I recall rumbling in the SecondMarket Observer thread when Q2 2014 was up and no such market was provided.

If that "secondary market" was not OTCQX or something like it, what could it be? I had no news of any trading of BIT shares going on before GBTC started trading on OTCQX.

And I don't know when the 6 months became 12.  

[skivrmt]

Not sure about the "nimble" part... When the fund started, they had promised an open market by Q2 2014.  (And the minimum holding period was only 6 months.)

Fortune, Dan Primack,  2013-09-26
http://fortune.com/2013/09/26/first-bitcoin-investment-fund-launches/

Bitcoin Investment Trust plans to spend the first several months in asset-gathering mode, and will open up the secondary markets for trading six months after launch.

And I think you are misconstruing that quote.  

First, it doesn't say "minimum holding period" of 6 months.  It say they planned to open up "secondary markets" for trading six months after launch.  

Second, secondary markets does not mean "open" market, which I'm assuming you take as equal to a "public" market.  Long before bitcoin, Second Market got its start serving as a way for people to trade non-public securities.  I.e. owners of Facebook stock before it went public, that were acquired either in VC rounds or via employee grants.  It required purchasers to be accredited investors, and thus the transactions were exempt from requiring an SEC approved registration statement.

There may be nuances that escape me, but I remember reading such from the documents on their website.  The clients could not redeem or sell their shares to other people before 6 months, and after that they would be allowed to trade them in a specific market, that had been promised for Q1 or Q2 2014.  I recall rumbling in the SecondMarket Observer thread when Q2 2014 was up and no such market was provided.

If that "secondary market" was not OTCQX or something like it, what could it be? I had no news of any trading of BIT shares going on before GBTC started trading on OTCQX.

And I don't know when the 6 months became 12.  

You could sell your BIT shares before GBTC.  If you held for 12 months.  They were allowed to be liquidated once per month.  That is considered a secondary market, albeit a very illiquid one.

[JorgeStolfi]

You could sell your BIT shares before GBTC.  If you held for 12 months.  They were allowed to be liquidated once per month.  That is considered a secondary market, albeit a very illiquid one.

Well, what can I say? That is not my recollection.  What I read said that after 6 months shareholders could redeem, but not resell (except in special cases with express authorization from SecondMarket).  The promised market was definitely distinct from redemption and from such exceptional sales.

[600watt]

You could sell your BIT shares before GBTC.  If you held for 12 months.  They were allowed to be liquidated once per month.  That is considered a secondary market, albeit a very illiquid one.

Well, what can I say? That is not my recollection.  What I read said that after 6 months shareholders could redeem, but not resell (except in special cases with express authorization from SecondMarket).  The promised market was definitely distinct from redemption and from such exceptional sales.

if you refer to this forum, my advise is: nothing.


(back to eternal ignore.. )

[bad trader]

The GBTC market closed at 50 dollars per share with volume of 2756 shares (less than 275 bitcoins).



The volume was lower than Thursday's 2844. It remains to be seen if Friday's high volume was an anomaly.