the winkelvii aren't trading bitcoin here, they are just offering shares in their company that holds bitcoin.
If they have 1% of all bitcoins, that's 100,000 BTC which is approximately 100M USD - so this is the valuation of their 'company'. They are offering stock in approximately 20M USD and so you will own part of the company whose valuation will float on the price of bitcoin. They will keep 80% of the company and sell stock up to 20%.
There is nothing new in what they are doing here - just offering stock in a company. All the winkelvii are doing is spreading their risk - they aren't selling bitcoins or trading bitcoins from fiat. This doesn't seem that much of a big deal to me other than the media attention this will garner.
Will
Topic: 2013-07-01 WSJ - Winklevoss Twins File to Launch Bitcoin Exchange-Traded Product - page 2. (Read 5067 times)
July 02, 2013, 04:20:55 AM
July 02, 2013, 04:16:49 AM
Exactly. Even if there was demand for a ETF for an alternative CC it wouldn't make sense for a single ETF and single trust to handle both. I mean there are Physical Gold ETFs and Physical Silver ETFs but you don't see mixed Silver & Gold ETFs. Ticker symbols are cheap and there are thousands of ETFs. If the first one gets approved and there is demand no reason you couldn't have a whole family of CC based ETFs.
There is the Central Fund of Canada. It is not actually ETF iirc though, but a company whose idea is to act as ETF before they existed.
July 02, 2013, 12:38:48 AM
I'd like to know their model for trading the underlying asset. Where will the balance be held and who by? The Winkelvii?
I hope they do it right. The last thing we need is a crash caused by a bucket shop operation.
I hope they do it right. The last thing we need is a crash caused by a bucket shop operation.
Apparently they're hiding the private key for the underlying asset in a US bank vault.
July 02, 2013, 12:13:05 AM
I'd like to know their model for trading the underlying asset. Where will the balance be held and who by? The Winkelvii?
I hope they do it right. The last thing we need is a crash caused by a bucket shop operation.
I hope they do it right. The last thing we need is a crash caused by a bucket shop operation.
July 02, 2013, 12:03:33 AM
What will be the smallest number of shares one can buy?
1? Or 100? More?
1? Or 100? More?
July 01, 2013, 11:01:13 PM
The interesting thing is the filing keeps referring to their holdings as "math-based assets." I'm wondering if this leaves room for alt currencies.
Actually, the filing never refers to their holdings as just "math-based assets", it specifically refers to their holdings as "Bitcoins", defined as "a type of a Digital Math-Based Asset". The filing does refer to altcoins as examples of alternative Digital Math-Based Assets and Bitcoin's competion, though the Trust does not deal in anything other than bitcoins specifically.Exactly. Even if there was demand for a ETF for an alternative CC it wouldn't make sense for a single ETF and single trust to handle both. I mean there are Physical Gold ETFs and Physical Silver ETFs but you don't see mixed Silver & Gold ETFs. Ticker symbols are cheap and there are thousands of ETFs. If the first one gets approved and there is demand no reason you couldn't have a whole family of CC based ETFs.
July 01, 2013, 10:35:47 PM
The interesting thing is the filing keeps referring to their holdings as "math-based assets." I'm wondering if this leaves room for alt currencies.
Actually, the filing never refers to their holdings as just "math-based assets", it specifically refers to their holdings as "Bitcoins", defined as "a type of a Digital Math-Based Asset". The filing does refer to altcoins as examples of alternative Digital Math-Based Assets and Bitcoin's competion, though the Trust does not deal in anything other than bitcoins specifically. July 01, 2013, 09:59:28 PM
Watching this. Looks interesting.
Smoothie, wanna start a Litecoin ETP now?
The interesting thing is the filing keeps referring to their holdings as "math-based assets." I'm wondering if this leaves room for alt currencies.
July 01, 2013, 09:49:28 PM
Watching this. Looks interesting.
Smoothie, wanna start a Litecoin ETP now?
July 01, 2013, 09:14:11 PM
Watching this. Looks interesting.
July 01, 2013, 09:10:42 PM
And after all that people will not be buying an actual bitcoin (or possessing private keys) just a promise from Winklevi that they hold bitcoin in equal amounts somewhere to back their deposits ... what are the rules on taking delivery of btc? They probably couldn't do that without becoming a "money transmitter"
Issuance of new shares and redemption of existing shares is only in baskets of 50,000 shares (10,000 BTC). The process outlined in the S-1 is very similar to physical gold ETFs. To be issued new shares (as opposed to buying shares on market) one needs to deliver 10,000 BTC to the trustee. The trustee will then issue a new basket of 50,000 shares and transfer them to the depositor. To redeem shares the same thing applies, one must have 50,000 shares and can then take delivery of 10,000 BTC.
Like in other similar ETFs the overwhelming majority of investors will never make a deposit or redeem shares, and will just trade existing shares on the market.
As for MT regs. There are various exemptions for MT regulations including registered broker dealers and deposit institutions. I would imagine the fund would use an exempt entity or become an agent of an existing MT rather than try to become licensed as a MT in all jurisdictions.
July 01, 2013, 09:07:50 PM
If this is approved, anyone cares to predict when all this will come to market?
They'll want to as fast as they can without compromising their investment
It needs to be approved by regulators and then accepted by exchange underwriters. The process moves at the speed of government with a healthy dose of beucracy and side order of legal teams. We are talking a timeframe in months if not the better part of a year. There isn't much they can do to make it go faster.
Is there any money in trying to have another one?
July 01, 2013, 09:05:56 PM
If ever there were news to drive price speculation, this surely is it.
July 01, 2013, 09:02:04 PM
The increase in liquidity and legitimacy should be a boost ... but if it gets big it will become a centralised point for price ... with all the possibilities of manipulation and control that opens up.
And after all that people will not be buying an actual bitcoin (or possessing private keys) just a promise from Winklevi that they hold bitcoin in equal amounts somewhere to back their deposits ... what are the rules on taking delivery of btc? They probably couldn't do that without becoming a "money transmitter" ... what a thicket of laws and regulations surrounding some simple private keys ... lol, absurd when seen from a distance. Imagine if they did the same thing with PKI and GPG keys?
And after all that people will not be buying an actual bitcoin (or possessing private keys) just a promise from Winklevi that they hold bitcoin in equal amounts somewhere to back their deposits ... what are the rules on taking delivery of btc? They probably couldn't do that without becoming a "money transmitter" ... what a thicket of laws and regulations surrounding some simple private keys ... lol, absurd when seen from a distance. Imagine if they did the same thing with PKI and GPG keys?
July 01, 2013, 09:00:43 PM
If this is approved, anyone cares to predict when all this will come to market?
They'll want to as fast as they can without compromising their investment
It needs to be approved by regulators and then accepted by exchange underwriters. The process moves at the speed of government with a healthy dose of beucracy and side order of legal teams. We are talking a timeframe in months if not the better part of a year. There isn't much they can do to make it go faster.
July 01, 2013, 08:56:33 PM
If this is approved, anyone cares to predict when all this will come to market?
They'll want to as fast as they can without compromising their investment
July 01, 2013, 08:51:30 PM
If this is approved, anyone cares to predict when all this will come to market?
July 01, 2013, 08:21:35 PM
Thank you Winklevii, this is probably the biggest step to financial legitimacy in Bitcoin's brief lifetime.
A listed Bitcoin ETF was an "obvious" idea that someone had to put together sooner or later, but coming from them rather than a random "some guy" is priceless in free press and legitimacy.
If they manage to pull this off, I agree that the listed Bitcoin ETF liquidity could quickly dwarf all existing bitcoin exchanges and become the new standard for pricing. In other words: a new era in trading bitcoins.
A listed Bitcoin ETF was an "obvious" idea that someone had to put together sooner or later, but coming from them rather than a random "some guy" is priceless in free press and legitimacy.
If they manage to pull this off, I agree that the listed Bitcoin ETF liquidity could quickly dwarf all existing bitcoin exchanges and become the new standard for pricing. In other words: a new era in trading bitcoins.
July 01, 2013, 08:15:21 PM
It will also open up the ability to hedge using shorts against the ETF.
Take a company which needs working capital in BTC but doesn't want to be exposed to losses due to exchange rate decline. The company could open a margin account and short the ETF while holding physical BTC thus being hedge out against the exchange rate.
A person with BTC in cold storage and a brokerage account with sufficient margin could quickly liquidate/trim a BTC position by using a short against the ETF very quickly without keeping BTC on exchange or having to wait for the transfer.
Lastly it would be possible to buy sell options against the ETF. By selling "naked" calls against the ETF and holding physical BTC it would be possible to secure a call revenue stream at the expense of capped upside potential.
Take a company which needs working capital in BTC but doesn't want to be exposed to losses due to exchange rate decline. The company could open a margin account and short the ETF while holding physical BTC thus being hedge out against the exchange rate.
A person with BTC in cold storage and a brokerage account with sufficient margin could quickly liquidate/trim a BTC position by using a short against the ETF very quickly without keeping BTC on exchange or having to wait for the transfer.
Lastly it would be possible to buy sell options against the ETF. By selling "naked" calls against the ETF and holding physical BTC it would be possible to secure a call revenue stream at the expense of capped upside potential.
July 01, 2013, 08:12:20 PM
Doesn't this open up all of the existing trading tools and options without any new software or websites to trade on to every single trader out there?
Exactly, no need to reinvent the wheel. All the data feeds will carry BTC price, and all the trading software in the world will 'just work' with it. Trading lag no more, and no need to wire your money to shadow dealers in Russia, Slovenia or Japan. Pure bliss.
Jump to: