[2019-01-30] Gemini Passing SOC-2 Examination a Step Towards Bitcoin ETF Approva

[Jgilpulg]

Becoming the first exchange to pass SOC-2 examination could give the SEC more reason to approve their COIN exchange-traded fund.

https://bitcoinist.com/winklevoss-gemini-soc-2-bitcoin-etf/

[BitHodler]

I do appreciate the fact that they are doing the best they can to further legitimize their exchange, but it won't be doing anything for the SEC in terms of making it more likely to have them finally approve an ETF.

It would help if their exchange generated more volume, but that's more a matter of time than anything else. I can see there being enough demand in the pipeline with how unregulated exchanges will be driven in a tight corner more and more.

I wonder when Coinbase will follow considering how much of a big deal it is in terms of gaining more legitimacy within the US, especially as crypto related platform.

[pixie85]

They won't get the approval because they don't have a good custody solution. If they keep trying to make ETF based on their own exchange happen it's not gonna happen. It's just that simple. Cboe ETF has that custody solution and will be the first to get approved when the government deals with this shutdown problem.
I still think that we don't need this ETF or any other wall street intervention to end the bear market.

[squatter]

They won't get the approval because they don't have a good custody solution. If they keep trying to make ETF based on their own exchange happen it's not gonna happen. It's just that simple.

That might be why they're pursuing SOC-2 auditing. The SOC-2 is a security review of a service's infrastructure, underlying databases and in this case, cryptocurrency storage system.

Why can't they establish their own trust? Why do they need a third party custody solution?

Cboe ETF has that custody solution and will be the first to get approved

Probably so, but I think that's mainly because it's backed by Cboe and VanEck. The Winklevoss twins are little fish and the federal government doesn't owe them any favors.

[pixie85]

Why can't they establish their own trust? Why do they need a third party custody solution?

The SEC will not allow a company that is running an exchange to launch an ETF and hold funds because it's a vulnerability. I can only speculate that a small exchange like theirs could manipulate their profits from ETF by changing prices on the exchange and it would be pretty profitable because if they get ETF approval it will become worth at least ten times more than their exchange. They are trading only 10 million USD in BTC a day. 9 times less than Binance.
What happens if somebody hacks their exchange? It's much safer to allow a third party to store their coins when they are dealing with daily traffic on their exchange and need to keep hot wallets there. All hot wallets are ticking bombs

[joniboini]

I still think that we don't need this ETF or any other wall street intervention to end the bear market.

Agreed, they will eventually come anyway but not sure when. Even if it does come, if there's a bull run, maybe speculation is what fuels them the most. The market is very easy to get swayed by news like this. The previous run is more or less fueled by hype for the Bitcoin futures, new moon boys, those who want to get rich quickly and so on. The next bull run should be more mature. But anyway, we've seen price history like this previously, so it's not a surprise.

[squatter]

Why can't they establish their own trust? Why do they need a third party custody solution?

The SEC will not allow a company that is running an exchange to launch an ETF and hold funds because it's a vulnerability. I can only speculate that a small exchange like theirs could manipulate their profits from ETF by changing prices on the exchange and it would be pretty profitable because if they get ETF approval it will become worth at least ten times more than their exchange. They are trading only 10 million USD in BTC a day. 9 times less than Binance.
What happens if somebody hacks their exchange? It's much safer to allow a third party to store their coins when they are dealing with daily traffic on their exchange and need to keep hot wallets there. All hot wallets are ticking bombs

Maybe it has something to do with that, although I assume the trust's bitcoins would be held in cold storage, like most of Gemini's funds are, and I'm sure funds couldn't legally be commingled. As long as their registrations and disclosures are in line, I doubt there's much concern about manipulation by the trustee.

I think the biggest issue facing the Winklevoss twins is the same one facing VanEck -- manipulation of overseas spot markets.

[Kakmakr]

Why can't they establish their own trust? Why do they need a third party custody solution?

The SEC will not allow a company that is running an exchange to launch an ETF and hold funds because it's a vulnerability. I can only speculate that a small exchange like theirs could manipulate their profits from ETF by changing prices on the exchange and it would be pretty profitable because if they get ETF approval it will become worth at least ten times more than their exchange. They are trading only 10 million USD in BTC a day. 9 times less than Binance.
What happens if somebody hacks their exchange? It's much safer to allow a third party to store their coins when they are dealing with daily traffic on their exchange and need to keep hot wallets there. All hot wallets are ticking bombs

Maybe it has something to do with that, although I assume the trust's bitcoins would be held in cold storage, like most of Gemini's funds are, and I'm sure funds couldn't legally be commingled. As long as their registrations and disclosures are in line, I doubt there's much concern about manipulation by the trustee.

I think the biggest issue facing the Winklevoss twins is the same one facing VanEck -- manipulation of overseas spot markets.

I just have a funny feeling that the Winklevoss twins are going to change their strategy from applying for a Bitcoin ETF, to the same strategy as Fidelity Investments <Bitcoin custody service>

They know they cannot convince the SEC that they can prevent manipulation of overseas spot markets, so they have to make sure that Gemini can be a safe option for institutional investors to buy coins on the side. <Hacking of centralized exchanges are a big threat and they need to create a safe environment for these investors to store their coins>

[Lucius]

Cboe ETF has that custody solution and will be the first to get approved when the government deals with this shutdown problem.

You may have missed the information that VanEck SolidX Trust withdrawn their application, and that they need to apply again in future. But the process for considering the application is up to 8 months/240 days long, so chance for any BTC ETF approval this year is very small, or better to say fairly unrealistic.

USA government shutdown actually did not change anything, proposal from Cboe ETF (VanEck SolidX Trust) would have been denied anyway. It will take another 2-3 years at best to ETF be approved to someone, and it is not such a bad thing - less manipulations with price will allow many to buy more coins at fairly low price.

[pixie85]

Cboe ETF has that custody solution and will be the first to get approved when the government deals with this shutdown problem.

You may have missed the information that VanEck SolidX Trust withdrawn their application, and that they need to apply again in future. But the process for considering the application is up to 8 months/240 days long, so chance for any BTC ETF approval this year is very small, or better to say fairly unrealistic.
USA government shutdown actually did not change anything, proposal from Cboe ETF (VanEck SolidX Trust) would have been denied anyway. It will take another 2-3 years at best to ETF be approved to someone, and it is not such a bad thing - less manipulations with price will allow many to buy more coins at fairly low price.

I know about it. They withdrew to reapply after the government shutdown because they expected the ETF will get rejected and the reason given will be the shutdown that prevented the SEC from analysing the case. They couldn't find a reason to reject it last year so they would blame it on the shutdown.
If they apply by the end of March there's still enough time for it to go through this year.
The shutdown changed a lot because it gave the SEC a reason to deny it. They've been looking for such reason for many months. If they wanted to deny it just like that they would have done it much earlier.

[1Referee]

If they apply by the end of March there's still enough time for it to go through this year.
The shutdown changed a lot because it gave the SEC a reason to deny it. They've been looking for such reason for many months. If they wanted to deny it just like that they would have done it much earlier.

The shutdown didn't change anything. This ETF was destined to be rejected even without a government shutdown.

The SEC is only delaying their final decision to make it look like they do everything they can to not outright reject this application. In other words, they are trying to avoid being known as an anti Bitcoin government body.

An ETF will only have a shot with US legacy institutions entering the space and generate plenty enough volume to have the US be more of a demand factor, and that's likely when Vaneck might consider to try it once more. Fidelity, Bakkt, Nasdaq is a pretty decent lineup, so we'll see where it goes.

[hatshepsut93]

The SEC explained many times why they reject Bitcoin ETFs - they think that global Bitcoin markets are unregulated and this will pose risks to investors. I think no ETF will ever be approved until a majority of Bitcoin's trading volume will come from well-regulated exchanges. It's time to forget about ETFs for a few years and focus on something more productive instead.

[btyco]

VanEck already resubmitted their application so things are looking up. Winklevoss are doing everything right now having already failed in the past. It's just a matter of time before they get an etf application approved

[BLAST2MARS]

VanEck already resubmitted their application so things are looking up. Winklevoss are doing everything right now having already failed in the past. It's just a matter of time before they get an etf application approved

Matter of time? Years or decade? I will only feel hopeful for the other if even just one of those rejected etfs before are finally approved in the first quarter of this year but none of them are close to that. We are just hearing the same resubmit and denied over and over again.