Topic: Buy bitcoins on Nasdaq - page 2. (Read 13726 times)

Nonsense.  You do realize that registration, approval, underwriting, listing, and pre-IPO process is measured in month lots of months.

200K BTC over 6 months is 1,800 per day.
200K BTC over a year is 547 per day.

Far easier to just sell a "small" on the market each day then go through all this process plus you gain the added advantage of selling over a period of time and getting capital back quicker rather than waiting 6-12 months and selling it all at once (at potentially a much lower price).


I mean it is that hard to actually read the S-1 (publicly released).  It isn't a company it is an ETF and the Bitcoins are held by a trust.  0.2 BTC per share issued.  The trust can't spend any of those Bitcoins not a single Saotshi for anything... ever.   The trust simply keeps 0.2 BTC * the # of shares outstanding.  Nothing more, nothing less.

The sponsor (a company which is NOT going public) can charge a management fee but usually these are something like 0.4% so we are talking decades before any significant fraction of the coins in trust are "paid out".

The ETF may be a bad idea, it may not ever get approved, it might be downright silly but it would be the absolute worst possible way to sell 200K BTC.  I can't possibly think of a method with more cost, more legal complications, more chance of failure, more risk, and require more time.

this ETF will be constructed to go out and buy new BTC, not sell the private stash of the Winklevii.  that would be illegal unless they plan on "donating" their BTC to the Trust, which I highly doubt.  so whatever investment fiat goes into buying shares will represent new demand.

It's a chicken and egg problem. If not enough people buy into it, then they're back to where they've started it. If people buy the entire trust, then that means Bitcoin already succeeded, and they've succeeded. Your proposition doesn't work

i have to agree.. this was my first thought when i saw the article too
a 200k sell on the current market would drive the price down but by doing it this way and creating demand from a new market if enough people bite it'll drive the price up just long enough for them to have turned all their BTC into cash

their 'company' will then be able to pay them wages/dividends and generally bleed down the value of BTC whilst only they benefit from it

it's a clever piece of latteral thinking, but not a good thing for a technology whose best outcome would be it stabalised into a currency

That has never stopped them before.  Also contrary to popular opinion naked short selling is NOT illegal in the US.  It likely should be.  There is no conceivable reason that entities are allowed to sell something they don't have but the SEC has NOT made naked short selling illegal.  Now there are rules which make certain activity illegal like naked short selling with the intent to artificially manipulate the price lower however the problem there is "intent".  What is the difference between short selling something because you believe it is overvalued and short selling it because you believe you can manipulate it downward.  On the ticker absolutely nothing and that provides entities which do it plausible deniability.  They are almost never prosecuted and barring a whistle blower it is almost impossible to prove the case even if they are.



However naked short selling an ETF which allows redemption to manipulate the price below NAV is a good way to simply lose a lot of money.  1 share = 0.2 BTC.  Now it will be traded in dollars but for simplicity I will use BTC pricing just remember it would be the BTC equivalent in USD.  The naked short seller inflates supply causing the ETF to fall below NAV.  Lets say it trades to 0.19 BTC per share (whatever that is in USD).  A large institutional investor could simply purchase 50,000 shares @0.19 BTC ea = 9,500 BTC.  The institutional investors then redeems the basket of 50,000 shares for 10,000 BTC.  The institutional investor who already has some "physical BTC" can execute both of these simultaneously and simply profit 500 BTC instantly.  Obviously this is a zero sum event so the amount of profit the redeemer makes is simply a transfer of wealth from the short seller.  One gains 500 BTC the other loses 500BTC.

Would you like to buy 10,000 BTC for 9,5000 BTC?  I know I sure would.  

http://online.wsj.com/article/SB10001424127887324904004578537692730996164.html

http://www.cato.org/sites/cato.org/files/serials/files/regulation/2008/2/v31n1-6.pdf
besides, it just means cheaper coins for us long run. if they sell too much, and lose money when they can't cover, that's a deterrant. It's illegal if they don't cover.

Haha thank you laws

it's illegal

What would stop mega banks from naked short selling?

I know I am the OP of this thread,  but I never really chimed in.

I want to point out the following in the most related ETF I can think of :  SLV

iShares Silver Trust (ETF)
NYSEARCA: SLV

Here are the general guidelines surrounding it:
Holdings: Physical Silver Bullion 100.00%

The Trust holds silver bullion and is designed to provide investors with a simple and cost-effective method to gain exposure to the price of silver.

http://us.ishares.com/product_info/fund/overview/SLV.htm

---

Substitute the words "silver" for 'bitcoin'  and you now know what this is.

If a billion dollars go into the bitcoin ETF,  making that 1% of all bitcoins worth a billion,  that means the total bitcoin marketcap is 100 billion if the plan is not to buy more bitcoins.   However most of these ETF's are fluid,  if that much money flows into it they need to make each of their shares worth 1/5 of a bitcoin.   They could mean that they will be buying large amounts of Bitcoins on the open market (or dumping them if they price goes down).

there are ways (I didn't quite understand how their filing addresses this)  but most ETF's allow for physical delivery.   I am unsure how they plan on addressing this,  if they plan on addressing it.

Another issue is the total amount of bitcoins they control,  if they do not increase it,  and money keeps pouring in (and they allow for physical deliver as most ETF's do)  then you now will see bitcoins worth 100k each or more.  

Not only are they going to be 'selling their bitcoins' to the investors ,  they will be making money on the transactions for life for 'managing' the fund.

You think mining fees are outrageous,  these guys just made the most powerful ASIC miner in history.    Every single transaction on that fund they will be making a profit from.

Numerous ETFs are perfect for short positions.

Hopefully, calls/puts will be available also to hedge positions.

Will just have to see what is offered at what prices, then place bets.

+1

too many of you are being way too pessimistic about what the Winklevii are intending.

a couple of times over the last 2 yrs I myself have had discussions with other early adopters about developing an ETF.  not only to profit from management fees but to help drive the price of BTC.

getting an ETF thru the SEC will be a huge windfall for BTC and likely drive the price several orders of magnitude higher as it will open easy BTC investing to the masses in a regulated, accepted way.  IRA's, Keogh's, SEPS, retirement plans, and institutions of all kinds will now be opened up to invest in BTC.  this too was the whole premise of GLD and SLV.

the Winklevii are just doing more of their part to try and help Bitcoin while making a profit doing so.  their ultimate goal is not to sell their stash; it is to drive the value of their stash to the moon.

There are no guarantees, but rough estimates would be 4-12 months - yes, it is a wide range and there does not seem to be a FedEx overnight type guarantee.  ;-)

With regard to the comments above, one can hope that the regulators do not coordinate and the SEC defines it as they will.  It is good to remember that very often the left hand does not know what the right hand is doing so it is a possibility.  Or, perhaps the SEC will disagree with FinCEN and interpret things differently. 

One can hope that either there is a turf war here or that the left and right hands do not coordinate.

when their proposal will be accepted or rejected?

No, that's what I thought too but DnT made a very good argument against that motivation. Read: If they wanted out they could simply cash out in roughly four months.

Title of thread is misleading. 

Also, this seems like it's simply an exit strategy for the winklevii more than anything.

The USA will define Bitcoin just as soon as it figures out how to define marriage... so next decade? 

The more I think about it, the more I feel this will be shot down as well.  FinCEN et al already sees Bitcoin as a good medium to launder money.  In order for this ETF to work, the regulators need to define Bitcoin as a commodity, not as a currency.  If Bitcoin is defined as a commodity then all the exchanges could argue that they are not MT's and render FinCEN essentially useless.  For obvious reasons I don't think this will be allowed.

However, as previously mentioned I still think some good can come out of all of this whether it succeeds or not as it will force regulators to make a much more transparent definition of just what they classify Bitcoin as.

I don't like this.