Topic: A Way to Create a True Publicly-Traded BTC Investment Vehicle (Read 644 times)
http://www.reddit.com/r/Bitcoin/comments/19hxuv/bitcoin_etf/
There's a lot of people thinking about this...
(Forget about ETFs with < 1% expense fees...
That is only possible because their assets are very liquid)...
But a publicly traded company whose assets are in cryptocurrencies.
The main problem that I see...
Is the expense of running even a junior public company...
Talented, experienced people do not work for free.
Ballpark startup costs $200K...
Ongoing annual costs with a CEO and 2-3 employees $500K...
Plus lots of stock options for everyone.
So you would need $5-10 million in capital invested in cryptocurrencies...
To support the infrastructure of a junior public company...
Because even at that size you are drawing 10-20% in expenses annually.
The problem is getting it off the ground...
Then it could explode in size very quickly.
I'm surprised that a larger miner with steady cash flow hasn't tried this yet.
I have been thinking about how someone might be able to create a publicly traded investment vehicle that can invest in various crypto-currencies. As I see it, if someone had the interest (and investment knowledge) to create such a company, it could be very quickly brought to the OTC markets (http://www.otcbb.com/) through the use of a reverse merger/takeover (http://en.wikipedia.org/wiki/Reverse_takeover). This would just require the creator of the fund to establish the business by naming it, apply to the secretary of state to incorporate it, and register with the SEC to not run afoul of any trading laws.
After this is completed, a "seeder" round of funding can be had, where initial seeders get a stake in the company in return for a cash infusion to go towards finding and acquiring a "shell" company that's already trading on the OTCBB. This would require research to find one with a low float and the least amount of shareholders, or shares owned by one large holder, to minimize the number of potential large sell-offs to occur once the price rises. Once acquired, things such as applying to change the ticker symbol could be handled, along with other house-keeping measures before having the seeders sell off their initial shares (or part of them) and a secondary offering is made.
The secondary offering would be made to allow outsiders to invest in the trading vehicle, which funds would go to acquiring BTC, LTC, etc etc etc. The fund would aim to keep a percentage of coin for long term investment, as well as constantly trade in and out of of various cryptos to turn a profit. These profits would hopefully build over time, increasing the hoarded cash and value of the company. At some point, the fund would be liquid enough to begin distributing a dividend. This would be a fiat dividend, as there is no legal way (that I see right now at least) of the fund paying out a crypto-based dividend. Once a dividend is instituted, theoretically the price should rise as investors will want to take advantage of the income being generated by the investment vehicle.
Creation of such a vehicle would allow anyone with a brokerage account or IRA to invest in cryptos without all the tricky steps and management involved with it currently. The return for the investor would be lower than self-management, but the ease of it will offset that. It would also further strengthen the floor under cryptos, and such a vehicle could have price ranges made public that they're targeting to buy certain cryptos at to give a bottom to the market, which leaves more room for the currency to grow.
Just an idea. It's not fully developed, but this is the general basis of it.
Opinions?
-Moose
After this is completed, a "seeder" round of funding can be had, where initial seeders get a stake in the company in return for a cash infusion to go towards finding and acquiring a "shell" company that's already trading on the OTCBB. This would require research to find one with a low float and the least amount of shareholders, or shares owned by one large holder, to minimize the number of potential large sell-offs to occur once the price rises. Once acquired, things such as applying to change the ticker symbol could be handled, along with other house-keeping measures before having the seeders sell off their initial shares (or part of them) and a secondary offering is made.
The secondary offering would be made to allow outsiders to invest in the trading vehicle, which funds would go to acquiring BTC, LTC, etc etc etc. The fund would aim to keep a percentage of coin for long term investment, as well as constantly trade in and out of of various cryptos to turn a profit. These profits would hopefully build over time, increasing the hoarded cash and value of the company. At some point, the fund would be liquid enough to begin distributing a dividend. This would be a fiat dividend, as there is no legal way (that I see right now at least) of the fund paying out a crypto-based dividend. Once a dividend is instituted, theoretically the price should rise as investors will want to take advantage of the income being generated by the investment vehicle.
Creation of such a vehicle would allow anyone with a brokerage account or IRA to invest in cryptos without all the tricky steps and management involved with it currently. The return for the investor would be lower than self-management, but the ease of it will offset that. It would also further strengthen the floor under cryptos, and such a vehicle could have price ranges made public that they're targeting to buy certain cryptos at to give a bottom to the market, which leaves more room for the currency to grow.
Just an idea. It's not fully developed, but this is the general basis of it.
Opinions?
-Moose
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