Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 8. (Read 17085 times)

I kind of agree with you even though I find your way of saying it as a bit patronizing and maybe even overly generalizing.

There are ways to have opinions about topics that are not ONLY just based on the number of bitcoin that we might hold or whether we might be better off if our bags are pumped, and sure there are differences between people who directly hold BTC and people who get exposure through markets through third parties or even if there might be pension plans and retirement accounts that are able to buy third party offered products and not able to buy BTC directly.

For sure, there are a lot of potential disadvantages to having so many BIG players starting to hold BTC for people and those people NOT being able to take direct possession of such BTC unless they sell their share(s) and buy the BTC directly.  So, surely there are a lot of possibilities that open up for shenanigans, and it is unclear if some of them will end up getting reckt if they are not HOLDING the underlying BTC, but then when it comes time for making certain kinds of votes about BTC and/or forks, then the fact that BTC are actually held by entities rather than individuals, some of the BTC incentives could end up getting perverted by such dynamics of normies putting value into BTC so that Blackrock (and some other larger players) can hold and/or control potentially large quantities of BTC and the forks off of such BTC.  It might not be clear how many years it might take before some of the dynamics of bitcoin ends up being perverted, especially since legislators are already trying to proclaim that BTC is ONLY valid if it is held by third parties, and those kinds of dynamics could cause quite a bit of challenges for various individual BTC HODLers...   

There are likely going to be continued informational campaigns regarding the value of BTC self-custody. and so it is difficult to see in advance how self-custody versus third party custody is going to end up playing out with the passage of time.


We can agree to disagree, and I am not going to claim to have had studied the details of the various offerings.. but maybe we could make a bet.. and if more than 6 get approved, then I win... hahahahahaha.. I am not really willing to bet very much, but it could be fun, even though we would need to find a mutually agreeable escrow and otherwise work out the terms... which I might end up getting screwed if I am not even very comfortable with my somewhat SOMA speculations in this direction.


Even though this is a grayscale thread, I doubt that Grayscale is a good example, because purportedly they already have enough BTC (600k or so) to cover all the shares, so the GBTC shares would get converted into Grayscale ETF shares... so yeah, maybe BTC have to be moved around, but on net there is no additional BTC purchases from the mere conversion. .even though there could be desires to get in and out of them when the new shares start to get traded.

The other ETFs would presumptively be purchasing BTC at the same rate that clients pile into the ETF products, so as soon as the ETFs go on the market, and whether there are any special acquisition abilities in the first 90 days, prior to the ETF actually going live, then surely I am not sure if that might create some market pressures, and I am not even aware of how it works with any kind of particularity.


You don't seem to be saying anything different than me in the pumping expectations arena.  I was largely proclaiming that pumping would be likely to come from the news of the BTC spot ETF approval in part based on the regulatory clarity that it helps to provide and the other part based on the desire to start to front run the actual product, which seems to be possible by retail and other folks who might have cash that is sitting on the sidelines and wanting to participate in some BTC pumpening.. which surely may or may not end up playing out, but I am more inclined to believe that there will be pump upon the news of whatever BTC spot ETF approvals end up happening rather than no pump or rather than a dump..

...and sure there could be some other counter-vailing news coming out at the same time, so I am not the kind of person who plays around in these kinds of plays anyhow.  I have been employing my own same system since about late 2015, which is to sell on the way up and buy on the way down, so I hardly give any shits because if the BTC price goes up I sell and if it goes down I buy.  I don't change much of anything based on what I believe might happen, except maybe on the margins.. or maybe I might change the intervals of my sales or my buys depending on how fast I might speculate that the BTC price might more in certain ranges... but ultimately, I rely little on predictions and I am more or less like a bot... but doing my resets manually since I know jack shit about how to get a bot to cooperate with my ideas of what to do without screwing things up.

the reason i say about stop hoping for spot approval in 2023.. because the only people wanting it are impatient people hoping for market reaction..
most bitcoins want to hold bitcoin not shares, so most bitcoins excited about ETF approvals are not exaggerating how soon a approval will happen for the ability to themselves buy shares. but instead they want it soon to see markets reaction...

as for thinking 12 will get approved at same time. that again is a pipe dream.. half the applications dont meet all specifications.. so they are not all going to get approved at same time.. at best id say 4.. but personally id say 1

..
as for the last part about the agents buying baskets
(for scenarios sake of mentioning a company lets use the topics brand: grayscale)
as soon as an approval is done. 90 days later the GBTC ETF is operational and grayscale is giving out its shares(EG 600k coin = XXXmil equivalent shares)
meaning the supply of shares is high on the 91st day.
it will take a while before greyscales own allotment of shares are sold to the public. meaning plenty of time from application approved to needing to add more baskets to supply later demand. maybe 3-6 months. so agents wont need to buy on approval day in large lumps. to then custodianise into coinbase to then collateralise to get greyscale to offer shares to agents to then sell shares to customers.. it would be a 3-6 month thing not a 1 day mega event.

grayscale wont want to accept agent openings on the 91st day as thats competition against grayscales own share allotment. so i doubt we would see agents flocking in on the 91st day buying and hoarding baskets of thousands of coins each all at once
(grayscale will have their own internal vetting process of who can be a agent/broker/dealer of their shares)

so again not some 1 day event where everyone goes on a BTC lump sum purchase event of thousands of coin in one day

yes of course there will be sentimental FOMO pumping. but not what id describe as lump sum basket buying the day a ETF is approved... my opinion ofcourse

No problem.  We have differing underlying theories about what we believe might end up happening, and in accordance to my theory, I doubt that the SEC is going to approve any of them until all of them have had a chance to update their application in order to have the liquidation/acquisition avenues/procedures clarified.

Under your theory none of this matters because Blackrock already knows what they are doing .. blah blah blah.. but under my theory Blackrock is going to get approved at the same time as the other 12 or whatever number of the applicants (including Grayscale conversion or not) ends up getting approved.


I will agree that is a good point to support that approval in 2023 does not make any material difference in terms of actual operation of the ETF.. so fair enough on that one... so then the other portion is just for the SEC to have the approval out of the way for whatever Christmas break and/or government shutdown interferences that might be upcoming.


Oh gawd.. here is one of the parts where you get a wee bit annoying again.  For your info, I hardly give any shits if BTC pumps or not, so I am not framing any of my thinking based on pump hopium, even though I do believe that BTC could pump based on news of an approval.. but yeah, maybe they would not be able to materially acquire BTC absent any opening and/or client purchases apart from the BTC that private persons (and private institutions and governments) decide to gather on their own based on these kinds of regulatory clarity ideas and also ideas to potentially front-run the BIGGER players and to front run those who are planning to get BTC through an ETF.

a december deadline has nothing to do with any serious ETF filing deadlines.. its just a consultation period of a filing that is not ticking very many boxes at all. so the december deadline has no connection to any importance of rushing other applications.. that was my whole point

we are already in november so you thinking there is chances of a 2023 operation also fall flat because even if one magically gets accepted it would be another 90days before fully operational.. so again 2024.

you are not going to see an operational ETF in 2023 so stop hoping for spot market pumps in 2023 caused by ETF agent basket purchases
sorry not gonna happen within the next 6 weeks

I already said like 2 or 3 times that I did not provide that earlier link in order to get into any specific ETF application (only to show that there has been a request for clarification from the applications that I believes justifies at least a 2 week delay - until at least December 1 for all of the BTC spot ETF applicants), and so my theory is that several of them are going to be approved at the same time, and maybe or maybe not Grayscale will be included in the approvals.. I am more inclined towards Grayscale also being included.. even though it seems that they may have engaged in something close to criminal conduct.   

I am also inclined towards hearing news of the approvals (so they can actually start operations) in 2023 rather than 2024 or later (or never as you suggest might happen).

And, yes, as far as I understand what you might be saying. You are leaning towards Blackrock first and maybe at a date in mid 2024 rather than early 2024, and maybe not any of the others being approved except Blackrock..  maybe I should go back and attempt to parse other things that you said to the extent that any of us (including you) might have any better clues than anyone else.  I will admit that I am largely guessing based on some of the reasons that I already scatteredly attempted to outline.

ETF's are not a new invention. they have been around for 30 years. things like settling shares for cash and avoiding 'in-kind' swaps to other assets has always been a condition.. so yes applications that want to self custody and do in-kind swps direct to bitcoin wont get accepted..

this again is where some applications are not getting fact tracked. they are trying to re-invent the wheel but not knowing even the standard conditions of traditional ETF. so yes they will be denied..

again its the reason im saying blackrock has better odds then the one you linked

Sometimes you provide some interesting talking points Franky, but sometimes you can be so annoying too when you seem to lecture in regards to some basics and then you seem to either gloss over other basics or to miss some whole areas of basic dynamics.

If the SEC ends up being accused of favoritism or even accused of being arbitrary and/or capricious, it does not necessarily need to be actually true that they are engaging in favoritism or that they are being arbitrary and/or capricious or lacking in a rational basis for their various chosen actions and/or outcomes, but if there are perceptions of favoritism and/or perceptions of lacking in rational basis for various approvals, then those can end up being sufficient hooks for people and/or entities to file lawsuits or to seek to overturn or to interfere with the SEC's decisions.

Also, no matter what there are going to be congressmen who approve or disapprove what branches of the executive are doing and might well end up being active or less active in regards to trying to change the powers of the SEC and/or Gensler, and those kinds of pushbacks can have some effects depending on how extensive they might be.. and maybe even sometimes back and forth with the White House in regards to what the President wants (not claiming that Biden knows much of what is going on, but Biden has people who are engaging in those kinds of interactions with the SEC and/or with Gensler.. the Exec is the boss of Gensler and can actually fire him.. congress can make life miserable for the SEC and Gensler but they might not be able to get the President and/or the courts to go along with their various grumblings about the SEC/Gensler).


It seems that the SEC is requiring a kind of assurance that the applicants are going to be using "approved" liquidation (acquisition) channels... so in that regard, when the SEC is soliciting amendments to the application (or the refiling), they are letting those ones who do not do it that they are going to be denied if they do not have the approved liquidation/acquisition channels with their anticipated procedures.

applications are not a "first-in" "first-accepted" policy.. some applications can get filed years ago and go for years being delayed, declined, appealed, re-filed, delayed, denied, appealed, refilled. (repeat repeat repeat) whilst others can be fast tracked and just tick all SEC boxes and get approved before the "first-in"

looking at all applications.. blackrock ticks more boxes then greyscale.
im not saying SEC will accept blackrock before THEIR deadline.. but im saying its more then likely the SEC will delay, deny-appeal,re-file process all the others

the SEC knows whomever gets accepted forms the precedence of criteria which other companies can then emulate/copy as a template to fast track their attempts for second, third place acceptance.. so the first acceptance needs to truly tick all boxes

there are other details like wallstreet/regulators want to have a high barrier of entry. its to prevent cheap competition offering similar services. so companies want to follow regulations to a point where its difficult for other companies to emulate.

i wouldnt call it favouritism for the SEC to pick blackrock first. id call it blackrock know how to do ETF applications, know what the SEC needs. and has experience in operating ETF.
its kind of like a job interview. would you recruit low barrier of entry inexperienced person with no skills with some legal trouble.. or a skilled/experienced recruit..

im playing the odds that 2024 WILL see a ETF operating.. but no announcement as soon as december.. and definitely not some unpopular untested brand like the one applying that wants self custody and share redeems 'in-kind' direct to crypto to avoid cash settlement (gain triggers)

my personal belief on favouritism would be if SEC was waiting for "roth", JPmorgan or Chasebank or some other commercial bank to apply

You make a lot of decent points Franky.. and I am not even that attached to any opinion that I have expressed in regards to my inclinations for December... but I do have some beliefs that underpin why I am inclined towards some of my thinking about some of the balancing that is going on in Gensler's thinking and/or the SEC.. and sure sometimes I am conflicted too since I am not really any kind of expert to know how much weight he or the SEC might give to some of the tradeoffs.

The SEC has been engaged in a quite a few legal battles and losing them, not only their legal battle with Grayscale, but also several aspects with their legal battles with Ripple and some of the other projects that they are wanting to label as securities.. so they have pretty strong opinions about everything else but bitcoin is a security, but the courts are not going along with them.

So just in regards to the bitcoin related ETFs, Blackrock has ONLY been in the application game for a few months, but once Blackrock filed (was it after the SEC lost the Grayscale or the Ripple case.. anyhow those two cases were lost right around the same time anyhow), it seemed that the sentiment changed towards the likelihood that an ETF would be approved in a fairly soon manner.

There is a kind of balancing regarding whether Blackrock could get approved first when there are around a dozen other applicants, and surely the Grayscale conversion does not fit into the same bucket as the various other ETF applicants... but a lot of the ETF applications are setting themselves up in similar ways, in accordance with back and forth communications with the SEC.

It seems to me that the SEC has to go through their approval process without appearances of favoritism (towards Blackrock for example, or unduly beating up on Grayscale, even though the court had beaten up the SEC pretty badly in their Grayscale decision).  If they are going to deny any of the ETFs or distinguish one situation from another they have to make sure that they have pretty sound reasoning since the court had already ruled that the SEC's prior reasoning had little to no reasoning involved (which is part of the definition of arbitrary and capricious) including the SEC's attempt to suggest that a futures ETF product is superior to a spot ETF product in terms of following the market (or not being able to be manipulated).

I hate to even say much more because I feel that I am getting out of my depth.. and surely there are some theories that are similar to yours Franky in which some folks are saying that Gensler is not really going to approve, just delay delay and delay, and even if you might not have that strong of an assertion, Franky, I am just not persuaded that the SEC remains in that kind of a mode - even given some of the ways that Gensler has recently been talking about the status of the Spot BTC ETFs and even the level of the SEC's seeking various clarifications and/or coordinations which just seems to support that they are imminent to be approved.. and that they are likely all to be approved.. even Grayscale with some of what seems to have had been fraud going on.. .. and again, I am not necessarily going to be surprised if a rabbit gets pulled out of a hat in regards to some kind of a new reason to delay everyone.. maybe even if some new criminal charges were to be brought against Grayscale that might force them to get bought by blackrock or some other Big company and/or they would like to get rid of Binance too.. but those all seem to be wishing for too much too soon, and I have my doubts about whether they are going to be able to get their list of wishes and just be faced with so much pressure to approve a Spot ETF.. even quite a bit of vocalization and various ongoing threats coming out of congress too.

SEC have never shown any evidence of announcing early. they have always waited out deadlines or extended deadlines
i doubt they would wait out a year and then suddenly decide before the next set of deadlines in january that december will suddenly be magically a eventful time to break the cycle and announce before year end.

plus this weeks deadlines on the applications that are propositioning "in-kind" transfers frm shares to btc direct,  has nothing to do with any "final" decision. much like greyscale  last year when SEC asked them to list coinbase as third party. it wasnt a final deadline that demanded a final decision/acceptance event

im thinking jan-march something will happen. but it would more then likely be blackrock as my odds, compared to grayscale.
grayscale dont have ETF experience nor proof of money management for pension funds.. plus alot of legal battles with grayscales sister companies.. so blackrock has better positives than grayscale

here is what i think of genslers mindset
saying no/declining/delaying does not affect gensler personally.. he does not go out of pocket for objecting.. the lawsuits are paid via our tax money not his salary
infact the longer he can delay or say he is working on things the more grants/budget/expenses he can claim to cover 'costs' of evaluation.

however if he just blindly accepted all ETF as written. and one of them go wrong and cause millions of pensioners to lose their pensions.. his personal head would be on the chopping block. he would be answerable for his actions for letting a ETF start without oversight,due diligence

so dont expect a rush. there is no benefit to sec/gensler, in gensler rushing things

Yes.  There are some members who believe that the January 10, 2024 deadline is more realistic and others who believe that it has good odds of being approved this year.  I don't have strong feelings on the topic, but I am a bit more inclined to speculate that the ETFs have good chances of being approved this year instead of the first 10 days of 2024... but I am not going to hold my breath, and also if they end up getting pushed off after January 10th, then I would not be totally surprised even though it seems that there are a lot of indications that seem to show that approval is imminent. .which has me leaning towards believing this year has greater odds, and I might even be willing to entertain a friendly 50/50 bet, in which I take this year as my preferred side of the bet.

To me, I doubt they would even give any approvals, even after the Spot Bitcoin ETF applicants provides the Cash Creates in two weeks. I bet they'd request for more time to review the cash Creates, maybe this could be for another two weeks, who knows. We might likely not be expecting an ETF approval from SEC this year.

You absolutely correct. But looking at it from a different angle, While the prospects of ETFs getting approved can impact trust fund prices relative to their NAV, you can't elude the fact that trust funds and ETFs can serve different purposes and relatively attend to different investor preferences. For example, trust funds may have different investment strategies, focus on specific sectors or regions. This differentiation can create a special value proposition for trust funds that may certainly give investors reason to choose trust funds even with the approval and presence of an ETFs.

Yeah, but I already explained that I did not really pick the article in order to describe any substance beyond the fact that the SEC has likely put off its approval of any BTC spot ETF by two weeks because I am pretty sure the SEC made similar requests to all of the ETF applicants to the extent that the ETF applicants might not have already had such clarity in their Spot ETF applications.


Your theory (or your explanation regarding what is going on) sounds backwards Gormicsta.  

I would think that if there are other kinds of ETF product on the markets or other somewhat competitive products available then that could effect the direction whether premium or discount, and surely if there are prospects of an ETFs getting approved and coming onto the market, then that could well affect the differentiations in trust fund price (and the directions) relative to NAV... so I doubt the direction and/or the distance from NAV is a reflection of the quality of the underlying product.. .not that I am trading or playing around with any of those products, in regards to by preference for spot and also my preference for BTC rather than screwing around with shitcoins whether buying directly or buying them through some kind of a trust fund or an ETF.

Well that's certainly because the demand of LINK from the investors drives its trading price. the demands are pretty high, Hence the reason they can trade at a premium, investors are willing to pay more than the NAV of the funds. They  are pretty optimistic about the prospects of the assets so you can't blame them for being willing to pay a premium for those assets. I believe the investor's sentiment isn't that optimistic about BTC, ETH and ETC, Hence the reason the funds are traded at crazy discounts. It sure is Mind blowing lol.

the particular ETF applications involed in the link, dealing with the "cash creation" detail.. are applications that are not even insync with grayscale a couple years ago. though their consultation period may be a couple weeks for this detail. they are still a far behind grayscales progress..
the company you linked is not going to get an approval in december. they just have a deadline to sort themselves out to re apply with an application that sounds more closer to what grayscale was offering 2 years ago.


its mostly the SEC doesnt want to see actual real BTC assets on the nasdaq. for many reasons.. but yea i can and most can see that the 'in-kind' (shares-btc direct 'liek for like') would be a tax avoidance method.. they want to prevent, by forcing nasdaq traders to be forced to cash out at each trade to trigger cap-gains

well when you look at how relaxed regulators are with auditing any employers pension reserves for their employees. and how many companies syphon their employees pension pots.. its obvious that things like coinbase could just ruin things not just from their own customers but from their corporate clients using coinbase as a custodian..
the SEC is attempting to mitigate risk. but its still mostly asking these companies to do self-review have policies internally to self regulate so that the SEC doesnt have to send in personel every month to audit reserves..

i too find it strange they would rather have one coinbase custodianise 3 main ETF institutions rather then suggest independent key holders(multisig) not all affiliated with coinbase(and thus DCG)

Speaking of those funds, it is absolutely mind blowing how they are trading: none at NAV, BTC and ETH at discount, ETC at huge discount, while other LINK for example at an astonishing premium.

My main reason for bringing it up was ONLY to suggest that the dates for approval might be December 1st at the soonest, and I was not really even caring to get into any of the details of the meaning  of what they were doing, even though I presumed that it would have been for various kinds of control and/or manipulation prevention reasons and that sourcing of the coins would be known, and sure maybe there is also the tax monitoring advantages .. whether that was a central motivation or not, we already should have known that self-custody is not part of any the current expectations of any of the ETFs.. so that surely is part of the reason that the ownership of any ETF is inferior to owning spot BTC.. but surely there are going to be both institutions and also some individuals who end up getting into BTC because of the ETF price exposure that is allowable through their retirement savings accounts that would not allow for the direct purchasing and/or custody of BTC.

I suppose many of us have concerns about BIG players owning and controlling so many BTC, even if they have fiduciary duties to the supposed real owners, while we still have a not your keys not your coins situation that could end up having various blow-up scenarios that are bad for the users and perhaps even bad for bitcoin as a whole since some of the direct power of owning and controlling BTC would be held by the custodian who may well not be acting in the interest of the person who believes that he owns bitcoin when he only owns claims to bitcoin...or maybe he ONLY owns bitcoin price exposure..

Absolutely correct.
There have apparently been public quotes on the OTC market for a few of the Grayscale Trusts that were made available through private placements. On the OTCQX Best Market, individual and institutional investors may also trade the Trusts' shares publicly.
https://www.grayscale.com/crypto-products

in a bitcoin spot ETF .. they do not trade in bitcoin... they trade in shares for fiat..
the idea actually is the brokerdealers  manage, as agents of the ETF... a basket of SHARES which are sold for fiat

its already been known that the SEC wants to know which btc exchanges will secure, audit and transfer the actual bitcoin (EG  coinbase for greyscale/blackrock)

so lets say broker-dealer "ABC investments" wanted to be spot ETF agents..
they would with fiat, go to coinbase. pay $XXXXX fiat for a basket worths of BTC and coinbase would custody it and register the basket with greyscale. making it part of greyscales trust.. not ABC investments property/custody/ownership..
grayscale will then give ABC investments a lump of GBTC shares. where the GTBC shares are ABC investments property/customer/ownership.. which ABC investments can sell shares to its customers

ABC investments would not be trading bitcoin with its customers

im sure the link your wrote got details in wrong order/misunderstood. but im thinking the SEC is talking to coinbase to ensure coinbases systems are ready to register the baskets with blackrock, greyscale, ark.. so that agents can hand fiat over and the ETF hand shares back in a secure audited way via coinbase ratifying, securing and registering the custody of coins to allow ETF to create the shares to give agents access to

it a known think that dealers cant do bitcoin direct with their customers... its kinda the whole entire point of this whole 10 year saga of trying to get an ETF that shadows the spot price. rather than direct trade bitcoin itself.

its just that some applications are not doing what greyscale, blackrock and ark are doing.. some smaller applications have wanted to self custody actual btc and allow direct btc redemptions, which the SEC doesnt want and are saying no to.

---

the reasons the SEC want it the greyscale,blackrock,ark way.. of a middleman between agent and etf doing the custody. is this:

by a agent not doing "in-kind" share->btc redemption.. and instead SEC wanting just share->cash trading.. is that the trades trigger cap-gains

IF a broker/agent were to take a customers cash. give them shares then later at sell redeem to btc for the customer.. the customer is not then triggering cap-gains because they fiat-share-btc has not looped back to fiat to trigger gains.. its a "in-kind" non taxable swap to not see gains

so yes the sec wants the dealer-agent not to self custody, offer btc, do share->btc redemptions. its for tax reasons