If you own 3000 or more Bitcoin, Wall Street wants your advice

[Bostonbitcoin]

There's a lengthy discussion about this from half a year ago available in the Economics section:

The economics section post is about a completely different topic than what I am talking about (effect on exchanges)

I've read the S-1 including page 50 which covers redemptions.  I'm talking about the reality of how it will work and getting approvals for their method.

So far they haven't gotten the approvals and I can't almost guarantee they will not gain approval for the S-1 as written and this will be a key reason why.  I predicted this months ago and was correct.

[DPoS]

"Central Fund's purpose is to hold gold and silver bullion on a secure basis for the convenience of investors in the shares of Central Fund."

As I said earlier, you are making a CEF for bitcoin?

I guess this is the part where you say you can't say what you are doing

[Bostonbitcoin]

As I said earlier, you are making a CEF for bitcoin?

I guess this is the part where you say you can't say what you are doing

No one can legally discuss specifics like this in any way I know of publicly.

Sorry --- I'm trying to be MORE open, transparent and involved in the community than others in the investment business (despite the many drawbacks and some low quality interaction etc)--- very few people disclose their real identity, fewer still (if any) from the investment business.

I'll be open and responsive as possible but I just can't cross a line of what my lawyers tell me is not prudent.  The rules about public communications are very specific and places like chat boards/ bulletin boards are expressly included.

Some take this as a sign to be cautious of .....but the opposite is actually a major red flag.   Just as someone who uses the word "guaranteed", implies something is "approved" by the SEC etc....anyone who goes on a public forum and provides details about a potential offering is almost certainly in violation of securities laws and should be avoided.

[Entropy-uc]

Your apparent re-invention of the Winkelvoss wheel,

There is more than one way to skin a cat.

There are hundreds if not thousands of ways to create public offerings.

The Winkelvoss are smart guys but as far as I know they have never successfully raised funds for an offering, never been registered or even worked in the investment business and are fairly new to the space.


There are many major disadvantages of an ETF which someone who understands both spaces well can see:

Regulatory-   Despite whatever advice Winkelvoss received from the lawyers they paid to set up the vehicle, ETFs have several regulatory hurdles that other vehicles do not....they are learning this now as they are stuck in regulatory limbo.

Trading redemptions:  ETFs are required to allow DAILY redemptions.....this means that if there is a panic sell/ crash in the market and BTC is down 25% at 1pm ....then, because of that,  $50,000,000 worth of ETF shares are sold by holders of the ETF....then at market close the Winkelvoss would need to sell ANOTHER $50 mm in BTC on the market to meet those redemptions....therefor causing the price to spin further lower....they would not have the luxury of time because the redemptions must be met..this of course causes more of a panic sell, more volatility and is also a logistical nightmare.

Security/ logistics:  because of daily purchases and redemptions the security and logistics issues are significant.   Someone can literally buy $100 mm of the ETF on the market then sell it again the next day.  An EFT would need ready easy access to all those BTC for redemptions totally all holdings backed by public investors because theoretically all those investors could sell.   Securing the private keys AND having easy daily access to them is challenging.   They cannot simply be locked in a safe offsite....every single day there are net redemptions, someone (actually several people) would need to access those keys.  This brings up many other questions of logistics etc.

Volatilty:  because of daily purchases and redemptions, volatility would increase and panic sells would be worsened.

I thought of an ETF a long time ago, long before the Winkelvoss announcement and determined that these flaws and the accounting of private keys for tens of millions of dollars daily would be a logistical hassle -- it's possible the regulators agreed and this is why the ETF is now stuck in limbo.

It's a great idea but I believe there is a better way.

For the vehicle I'm researching it would employ some of the features similar to a REIT, Real Estate investment Trust and could trade daily on the open market but not be subject to daily redemptions (because holders would sell shares to other investors, not the fund as is the case with an ETF).



EDIT / added :  I'm confident there are better options than EFT --  however, the Winkelvoss bros might very well have solved these issues in some way I'm not aware of and their vehicle may not have the need for them to do daily redemptions ---  I won't negatively judge the details without knowing more than what has been listed in their documents because I don't think it's prudent to judge things unless one has facts

No one has to sell because of ETF redemptions. They just need to deliver BTC to the redeemers.

You really have no fucking idea what you are talking about.

[Bostonbitcoin]

No one has to sell because of ETF redemptions. They just need to deliver BTC to the redeemers.

You really have no fucking idea what you are talking about.

You are completely and totally incorrect.

"Just" delivering What could be tens of thousands of BTC based on a huge number of transactions, collecting and reconciling which public keys to send the BTC to and matching those keys with account holders is a massive undertaking ....but it's irrelevant because you are totally incorrect anyway.

[cp1]

You are completely and totally incorrect.

"Just" delivering What could be tens of thousands of BTC based on a huge number of transactions, collecting and reconciling which public keys to send the BTC to and matching those keys with account holders is a massive undertaking ....but it's irrelevant because you are totally incorrect anyway.

That's true, it's the reason the finance industry doesn't send money to a client's bank account.  I mean dealing with transactions, collecting and reconciling which bank account to send the money to and matching those accounts with their client's records, it's just too impossible.

[Entropy-uc]

No one has to sell because of ETF redemptions. They just need to deliver BTC to the redeemers.

You really have no fucking idea what you are talking about.

You are completely and totally incorrect.

"Just" delivering What could be tens of thousands of BTC based on a huge number of transactions, collecting and reconciling which public keys to send the BTC to and matching those keys with account holders is a massive undertaking ....but it's irrelevant because you are totally incorrect anyway.

Redemptions can only be done in blocks of 10000 BTC.  To one entity.

If you're going to claim you read the filing, you should actually follow through.

Do you think you can buy 1 share of SLV and demand they deliver an ounce to you?

[Bostonbitcoin]

Redemptions can only be done in blocks of 10000 BTC.  To one entity.

....
Do you think you can buy 1 share of SLV and demand they deliver an ounce to you?

It's blocks of 50,000 shares of the ETF to basket holders which is a certain category of investors such as broker dealers who become members of that category.

Anyone who thinks this is simple to solve can probably make some easy money by calling the Winkelvoss bros and the regulators and straightening them out-- good bet they'd be glad for the advice .....fact it's, it's not that simple.... it's a major hurdle and I will bet that if the ETF ever is launched it will not be with the same S-1 we see.

Not sure why people are so convinced that there is no possibility anyone has come up with a better model than the ETF ...when clearly it is not working so far.

[Entropy-uc]

Redemptions can only be done in blocks of 10000 BTC.  To one entity.

....
Do you think you can buy 1 share of SLV and demand they deliver an ounce to you?

It's blocks of 50,000 shares of the ETF to basket holders which is a certain category of investors such as broker dealers who become members of that category.

Anyone who thinks this is simple to solve can probably make some easy money by calling the Winkelvoss bros and the regulators and straightening them out-- good bet they'd be glad for the advice .....fact it's, it's not that simple.... it's a major hurdle and I will bet that if the ETF ever is launched it will not be with the same S-1 we see.

Not sure why people are so convinced that there is no possibility anyone has come up with a better model than the ETF ...when clearly it is not working so far.

Right 50000 shares, each share representing 0.2 BTC = 10000 BTC.  It isn't the trusts problem what happens to the coins after redemption.

Ready to withdraw your claims below?

No one has to sell because of ETF redemptions. They just need to deliver BTC to the redeemers.

You really have no fucking idea what you are talking about.

You are completely and totally incorrect.

"Just" delivering What could be tens of thousands of BTC based on a huge number of transactions, collecting and reconciling which public keys to send the BTC to and matching those keys with account holders is a massive undertaking ....but it's irrelevant because you are totally incorrect anyway.

[mrefish]

The REIT concept is interesting...

"Have at least 75% of its total assets invested in real estate"

This leaves room for a bitcoin holding that could provide appreciation, the real estate holdings could be focused on short term income yield.

[Minor Miner]

For some there is no point.  For some there is value in having BTC in a widely recognized format.  Right now the teenage girls clothing store The Limited has more value than all bitcoins on planet earth.   

I thought you were "wall street", some sort of expert on stocks?  You think the The Limited is a teenage girls clothing store?
Really?  Victoria Secret, La Sensa, Henri Bendel, Bath and Body etc.   
Fine to try and compare the "market cap" of btc to something (although it is foolish unless you consider btc is an equity) but try and get some facts straight.

[Minor Miner]

You are completely and totally incorrect.

"Just" delivering What could be tens of thousands of BTC based on a huge number of transactions, collecting and reconciling which public keys to send the BTC to and matching those keys with account holders is a massive undertaking ....but it's irrelevant because you are totally incorrect anyway.

That's true, it's the reason the finance industry doesn't send money to a client's bank account.  I mean dealing with transactions, collecting and reconciling which bank account to send the money to and matching those accounts with their client's records, it's just too impossible.

This is the funniest post so far....
The world will be a great place when we have some sort of thingy that can manage to figure out which names go with which numbers and stuff...

[greenlion]

Just to throw this out there, here's something immediately slimy about this guy that puts off anybody with a good sense of intuition --

On this forum he says something early on that suggests he came here disparaging having tried reddit first, and on reddit he says that he tried here first.

That's very much in the wheelhouse of scammy manipulative con artist pandering techniques.

Also soliciting roughly $25 million in Bitcoin capital without having a clue where to start? Really?

[Bostonbitcoin]

Also soliciting roughly $25 million in Bitcoin capital without having a clue where to start? Really?

No -- not soliciting....if I was I am well aware of sources of capital....

I was asking advice on this forum on the viability of something....which is not even an offering at all....I could not and would not even be close to accepting anyone's Bitcoin and never requested to.

[Minor Miner]

Also soliciting roughly $25 million in Bitcoin capital without having a clue where to start? Really?

No -- not soliciting....if I was I am well aware of sources of capital....
I was asking advice on this forum on the viability of something....which is not even an offering at all....I could not and would not even be close to accepting anyone's Bitcoin and never requested to.

He is asking for some criticism on an idea that he cannot tell you about.
The only part he can let you in on is that it will make him a lot of money but he needs to use your assets first.

[Bostonbitcoin]

He is asking for some criticism on an idea that he cannot tell you about.
The only part he can let you in on is that it will make him a lot of money but he needs to use your assets first.

No.  Again, not true.

[DPoS]

He can't say but I can since I ain't part of it

This is EXACTLY what that Canadian Fund for Gold & Silver is CEF.  And CEF is also the discription.  A Closed Ended Fund.

There are no redemptions in a Closed Fund.  Only Shares.  So he would get a group of old bitcoiners to pool their bitcoins and issue shares at a premium above the NAV.   Those shares would then be traded above the underlying asset.  Being that bitcoins can rise or fall the shares can rise or fall but the premium above the NAV can also rise and fall in relation to the actual value.

Kinda like CEF right now, there isn't much appeal for gold/silver holdings so their shares are selling very low because two things. Gold and Silver are down a lot from a year ago and also people do not think it is going to rise very soon so the premium above that NAV is low as well.  

So, the holders of this Bitcoin CEF would probably issue some of their shares to cash out but also hold a portion in the fund as that would rise as the value of bitcoin rises.

Sometimes additional shares can be issued and there are some small dividends paid and expenses etc..

But this is why he wants to partner since he has people that would like to buy the shares with their IRA which can't go buy bitcoins from Mt Gox.




Now, anyone here that feels like doing this can go do it especially if they have the trust of some old money bitcoiners

[Minor Miner]

He is asking for some criticism on an idea that he cannot tell you about.
The only part he can let you in on is that it will make him a lot of money but he needs to use your assets first.

No.  Again, not true.

That you CLAIM to be seeking advice on an idea that "you cannot tell us about".   TRUE.  Your own quote.
That you will make money from the use of our bitcoin?  IF THAT IS NOT TRUE, THEN PUT IT IN WRITING AND YOU HAVE THE COIN YOU SEEK.

[Bostonbitcoin]

You are completely and totally incorrect.

"Just" delivering What could be tens of thousands of BTC based on a huge number of transactions, collecting and reconciling which public keys to send the BTC to and matching those keys with account holders is a massive undertaking ....but it's irrelevant because you are totally incorrect anyway.

That's true, it's the reason the finance industry doesn't send money to a client's bank account.  I mean dealing with transactions, collecting and reconciling which bank account to send the money to and matching those accounts with their client's records, it's just too impossible.

This is the funniest post so far....
The world will be a great place when we have some sort of thingy that can manage to figure out which names go with which numbers and stuff...

Sure!

Merrill Lynch is going to become a basket holder in the ETF and develop a procedure to take BTC as redemptions...something they have never held and have no accounting or compliance or security procedure for.    And who sets up the public keys at Merrill?  Who holds the private keys?  Who is authorized to use them and how?   And surely the compliance department, which strictly reviews everything is going to simply approve this with no problems at all right?

You should take all your vast knowledge of Wall St and your stellar expertise and become a consultant....you can straighten out these regulators, fix the issues preventing the Winkelvoss ETF from being offered and you can help all these basket holders with the procedures to accept these non-existent bitcoin based redemptions that will occur.   They would be very impressed by your brilliance.  You obviously have such a deep understanding of things!

Seriously man.  If we met in person I doubt you'd have this kind of interaction.  I'm not Lloyd Blankfein but just consider the remote possibility that I know something about the industry I've worked in for a while.   You and I are both part of a small community that has a lot more in common with each other than 99% of the rest of the people not interested in BTC.

[Entropy-uc]

He can't say but I can since I ain't part of it

This is EXACTLY what that Canadian Fund for Gold & Silver is CEF.  And CEF is also the discription.  A Closed Ended Fund.

There are no redemptions in a Closed Fund.  Only Shares.  So he would get a group of old bitcoiners to pool their bitcoins and issue shares at a premium above the NAV.   Those shares would then be traded above the underlying asset.  Being that bitcoins can rise or fall the shares can rise or fall but the premium above the NAV can also rise and fall in relation to the actual value.

Kinda like CEF right now, there isn't much appeal for gold/silver holdings so their shares are selling very low because two things. Gold and Silver are down a lot from a year ago and also people do not think it is going to rise very soon so the premium above that NAV is low as well.  

So, the holders of this Bitcoin CEF would probably issue some of their shares to cash out but also hold a portion in the fund as that would rise as the value of bitcoin rises.

Sometimes additional shares can be issued and there are some small dividends paid and expenses etc..

But this is why he wants to partner since he has people that would like to buy the shares with their IRA which can't go buy bitcoins from Mt Gox.


Now, anyone here that feels like doing this can go do it especially if they have the trust of some old money bitcoiners

You are probably right.

The trouble is a CEF only benefits the administrator.  The bitcoins in it would be diluted by all the issuing fees, and ongoing administration so contributing BTC leaves you owning less coins when all is done.

And because you cannot deliver BTC for shares it doesn't allow for additional capital to enter the Bitcoin ecosystem like an ETF would.

So it's vaguely interesting if you desperately want an exit from BTC and feel your coins won't catch a bid.  Otherwise it's only good for the guy who gets to shave fees.