GBTC Bitcoin Investment Trust Observer - page 31.

bobabouey2

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Quote from: JorgeStolfi on May 10, 2015, 04:05:42 PM

Not sure about the "nimble" part... When the fund started, they had promised an open market by Q2 2014. (And the minimum holding period was only 6 months.)

Fortune, Dan Primack, 2013-09-26
http://fortune.com/2013/09/26/first-bitcoin-investment-fund-launches/

Quote

Bitcoin Investment Trust plans to spend the first several months in asset-gathering mode, and will open up the secondary markets for trading six months after launch.

Nimble compared to COIN. That was the context of the discussion.

And I think you are misconstruing that quote.

First, it doesn't say "minimum holding period" of 6 months. It say they planned to open up "secondary markets" for trading six months after launch.

Second, secondary markets does not mean "open" market, which I'm assuming you take as equal to a "public" market. Long before bitcoin, Second Market got its start serving as a way for people to trade non-public securities. I.e. owners of Facebook stock before it went public, that were acquired either in VC rounds or via employee grants. It required purchasers to be accredited investors, and thus the transactions were exempt from requiring an SEC approved registration statement.

JorgeStolfi

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Quote from: bobabouey2 on May 10, 2015, 01:49:51 PM

Quote from: billyjoeallen on May 10, 2015, 01:41:21 PM

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

Technically, its not the ETF that does that, it is the authorized participants. If the price is above NAV, they will buy baskets of new shares from the ETF and sell them, hence more supply and the price should fall. If below NAV, they will buy shares below NAV and redeem baskets which reduces supply.

In the case of BIT at least, it is the authorized participants who buy the bitcoins and give them to Grayscale in exchange for BIT shares, at the fixed ~1:10 rate. The reverse is the case when shares are redeemed.

Quote

I give Barry credit for being nimble and "hacking" something that is publicly tradeable first, even if it currently has limitations.

Not sure about the "nimble" part... When the fund started, they had promised an open market by Q2 2014. (And the minimum holding period was only 6 months.)

Fortune, Dan Primack, 2013-09-26
http://fortune.com/2013/09/26/first-bitcoin-investment-fund-launches/

Quote

Bitcoin Investment Trust plans to spend the first several months in asset-gathering mode, and will open up the secondary markets for trading six months after launch.

bobabouey2

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Quote from: billyjoeallen on May 10, 2015, 01:41:21 PM

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

Technically, its not the ETF that does that, it is the authorized participants. If the price is above NAV, they will buy baskets of new shares from the ETF and sell them, hence more supply and the price should fall. If below NAV, they will buy shares below NAV and redeem baskets which reduces supply.

GBTC has that mechanism. However, currently only shares that have been outstanding for a year may be sold on OTC. So in practice, it doesn't work. They are saying they will pursue full SEC registration, at which point, it could.

I give Barry credit for being nimble and "hacking" something that is publicly tradeable first, even if it currently has limitations.

gotmilk_

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Quote from: billyjoeallen on May 10, 2015, 01:41:21 PM

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

Maybe they do... We will see on 30. May when Grayscale updates info about the shares Wink

Still, new shares are locked for another year.

billyjoeallen

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Hide your women

A real ETF should purchase additional units if the price trades significantly over the spot price of the underlying commodity. Why is BIT not doing that?

JorgeStolfi

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Quote from: coinableS on May 10, 2015, 12:48:50 PM

I have a feeling that the SEC has already put their stamp of approval on COIN behind closed doors. What are they waiting for is the question. They approved a singapore corporation to open an exchange in NY (itbit). I believe they are waiting for Lawksy's office to role out the bit license before announcing that COIN is approved.

ItBit is not an ETF, it is a completely different business. AFAIK, SEC's involvement in their approval process was minimal; its was Lawsky himself who signed their charter to operate as a "Trust" (seemingly an "almost a bank" thing).

bobabouey2

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Quote from: coinableS on May 10, 2015, 10:07:10 AM

Quote from: BitcoinIsLiberty on May 10, 2015, 09:50:40 AM

http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

Except COIN would be way more liquid as a true ETF instead of the trust that Barry hacked together to squeeze into the markets. Once both are available through major markets I'm pretty certain that most people would choose to trade COIN over GBTC. Time will tell!

Not necessarily. Both entities use trusts. GBTC has the same method of issuing / redeeming shares via baskets and authorized participants as COIN. It just doesn't work now because of the one year holding period. If they can get SEC registered, that problem goes away. And COIN has not yet disclosed what its fees are, at least on the latest S-1A.

So the end game could be the same, but in the meantime, Barry managed to hack together a solution that at least gets something trading.

coinableS

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I have a feeling that the SEC has already put their stamp of approval on COIN behind closed doors. What are they waiting for is the question. They approved a singapore corporation to open an exchange in NY (itbit). I believe they are waiting for Lawksy's office to role out the bit license before announcing that COIN is approved.

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Quote from: BitcoinIsLiberty on May 10, 2015, 09:50:40 AM

http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

It is not just a bureaucratic process. The SEC has to decide whether they will allow the fund to be traded or not. It is not surprising that the SEC is still undecided, because it is the first fund whose only backing asset is a virtual currency with no backing asset.

If BIT can convince the SEC that they are better than COIN in some relevant sense, I suppose that they could be approved before COIN. Or, even, BIT may be approved and COIN denied, or vice-versa.

coinableS

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Quote from: BitcoinIsLiberty on May 10, 2015, 09:50:40 AM

http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

Except COIN would be way more liquid as a true ETF instead of the trust that Barry hacked together to squeeze into the markets. Once both are available through major markets I'm pretty certain that most people would choose to trade COIN over GBTC. Time will tell!

BitcoinIsLiberty

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http://insidebitcoins.com/news/barry-silbert-plans-to-have-bitcoin-fund-traded-on-nasdaq-or-nyse/32161
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”

Assuming they file right now would there be a chance they can beat COIN out the gates or would their filing have to go through the same long process?

Mayer Amschel

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The prices should go over 300 soon.

- Mayer Amschel

phoenix1

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Quote from: Chef Ramsay on May 09, 2015, 05:56:15 PM

Which is subject to change when they run out of money to tap into and subsequently come for pensions and 401Ks to nationalize. Or, the market just collapses and you're wiped out either way.

Lol !! You cynic you !!
But you're probably right - pension fund raids have been done before and they will be done again ... Undecided

Which makes someone else holding BTC in a fund for you seem even more risky, and all the while you pay them a nice chunk for their efforts ...

Chef Ramsay

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Quote from: bobabouey2 on May 09, 2015, 04:57:23 PM

Quote from: phoenix1 on May 09, 2015, 03:20:01 PM

Quote from: bobabouey2 on May 09, 2015, 02:35:22 PM

In the short term, since it was easier to get the BIT into a tax deferred retirement account, the fees are probably worth it.

Long term, if bitcoin takes off, there will no doubt be competition, and COIN / other investment vehicles will pop up with lower fees. And since it is in a tax-deferred account, David will be able to roll into one of those investments without taking a capital gain hit.

I hear you. Over time if more of these vehicles are created, fees will drop. I read somewhere that fees on some ETF's are as low as 0.04%. Makes this one seem even more extortionate. And I would imagine COIN will not be in a hurry to undercut GBIT by very much, if at all, given they will be a genuine ETF.
We will need a lot more competition than that to see fees drop significantly IMO.

Interesting to hear that he could 'roll' between them without penalties. I have no knowledge of any of these rules.
How does the tax deferral of a retirement account work? If it is just a deferral, is any CGT paid at the same rate at the end of the day? Or is there some tax relief too?

There are two general types. One a 401k or simple IRA, allows you to invest a certain amount of income, and that investment is not considered earnings or otherwise taxed (meaning you can invest more upfront). The investment then grows without taxes, capital gains or dividends. When you reach the qualifying age and withdraw the money, it is taxed as ordinary income. But, ideally you are in a lower tax bracket as you are retired.

Roth IRAs let you invest after tax income, but then distributions are not taxed.

Lots of other details.

Which is subject to change when they run out of money to tap into and subsequently come for pensions and 401Ks to nationalize. Or, the market just collapses and you're wiped out either way.

phoenix1

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Quote from: bobabouey2 on May 09, 2015, 04:57:23 PM

Quote from: phoenix1 on May 09, 2015, 03:20:01 PM

Quote from: bobabouey2 on May 09, 2015, 02:35:22 PM

In the short term, since it was easier to get the BIT into a tax deferred retirement account, the fees are probably worth it.

Long term, if bitcoin takes off, there will no doubt be competition, and COIN / other investment vehicles will pop up with lower fees. And since it is in a tax-deferred account, David will be able to roll into one of those investments without taking a capital gain hit.

I hear you. Over time if more of these vehicles are created, fees will drop. I read somewhere that fees on some ETF's are as low as 0.04%. Makes this one seem even more extortionate. And I would imagine COIN will not be in a hurry to undercut GBIT by very much, if at all, given they will be a genuine ETF.
We will need a lot more competition than that to see fees drop significantly IMO.

Interesting to hear that he could 'roll' between them without penalties. I have no knowledge of any of these rules.
How does the tax deferral of a retirement account work? If it is just a deferral, is any CGT paid at the same rate at the end of the day? Or is there some tax relief too?

There are two general types. One a 401k or simple IRA, allows you to invest a certain amount of income, and that investment is not considered earnings or otherwise taxed (meaning you can invest more upfront). The investment then grows without taxes, capital gains or dividends. When you reach the qualifying age and withdraw the money, it is taxed as ordinary income. But, ideally you are in a lower tax bracket as you are retired.

Roth IRAs let you invest after tax income, but then distributions are not taxed.

Lots of other details.

Thanks for the reply - yeh, I am sure there are loads of other details lol , but I think I understand the basic differences now

Can a BTC 'ETF' be part of either or just the Roth?

bobabouey2

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Quote from: phoenix1 on May 09, 2015, 03:20:01 PM

Quote from: bobabouey2 on May 09, 2015, 02:35:22 PM

In the short term, since it was easier to get the BIT into a tax deferred retirement account, the fees are probably worth it.

Long term, if bitcoin takes off, there will no doubt be competition, and COIN / other investment vehicles will pop up with lower fees. And since it is in a tax-deferred account, David will be able to roll into one of those investments without taking a capital gain hit.

I hear you. Over time if more of these vehicles are created, fees will drop. I read somewhere that fees on some ETF's are as low as 0.04%. Makes this one seem even more extortionate. And I would imagine COIN will not be in a hurry to undercut GBIT by very much, if at all, given they will be a genuine ETF.
We will need a lot more competition than that to see fees drop significantly IMO.

Interesting to hear that he could 'roll' between them without penalties. I have no knowledge of any of these rules.
How does the tax deferral of a retirement account work? If it is just a deferral, is any CGT paid at the same rate at the end of the day? Or is there some tax relief too?

There are two general types. One a 401k or simple IRA, allows you to invest a certain amount of income, and that investment is not considered earnings or otherwise taxed (meaning you can invest more upfront). The investment then grows without taxes, capital gains or dividends. When you reach the qualifying age and withdraw the money, it is taxed as ordinary income. But, ideally you are in a lower tax bracket as you are retired.

Roth IRAs let you invest after tax income, but then distributions are not taxed.

Lots of other details.

JorgeStolfi

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Quote from: ErisDiscordia on May 09, 2015, 12:23:38 PM

let me guess, it was government-run? Cheesy

In case it wasn't it was of course the failure of not enough government oversight Wink

No, it was a private plan (sorry to disappoint you). Government pensions have been "adjusted" at times, but they have been surprisingly dependable over half a century or more, even through bouts of hyperinflation and currency changes, military dictatorships, neocon governments, keynesian-socialist governments, just plain corrupt governments...

Of course, that collapse was indeed a failure of government oversight. (The military were in power at the time, so the only license that a business really needed was the support of some general, and the only finacial reports that had to be filed were those printed on 2" x 5" pieces of paper. Not that things have improved much since then.)

phoenix1

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Quote from: bobabouey2 on May 09, 2015, 02:35:22 PM

In the short term, since it was easier to get the BIT into a tax deferred retirement account, the fees are probably worth it.

Long term, if bitcoin takes off, there will no doubt be competition, and COIN / other investment vehicles will pop up with lower fees. And since it is in a tax-deferred account, David will be able to roll into one of those investments without taking a capital gain hit.

I hear you. Over time if more of these vehicles are created, fees will drop. I read somewhere that fees on some ETF's are as low as 0.04%. Makes this one seem even more extortionate. And I would imagine COIN will not be in a hurry to undercut GBIT by very much, if at all, given they will be a genuine ETF.
We will need a lot more competition than that to see fees drop significantly IMO.

Interesting to hear that he could 'roll' between them without penalties. I have no knowledge of any of these rules.
How does the tax deferral of a retirement account work? If it is just a deferral, is any CGT paid at the same rate at the end of the day? Or is there some tax relief too?

bobabouey2

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Quote from: phoenix1 on May 09, 2015, 06:28:28 AM

@ David Rahaby ... as you say you are long-minded (and I believe you) have you considered just how much the management fees will eat into your BTC over the years? IIRC correctly the annual fee is 2% of NAV and it is taken in BTC not USD, so if you start with 100 BTC ...
After 10 years = 81.7 BTC
After 20 years = 66.8 BTC
After 25 years = 60.3 BTC

I am using these time periods as you talk about 'retirement funds'.

So if you hold BTC in this wrapper for 25 years you will pay away 40% in fees, which seems extortionate for something that pays no dividends or coupons, and requires no rebalancing for duration or weighting. It basically sits there in cold-storage.

Put another way, in 10 years, 10 shares of GBTC will not be approximately 1BTC, it will be approximately 0.82 BTC, and at that time the price of the fund should reflect this (ie be based upon it's NAV).

Just wondering if anyone is even looking at or thinking about this ...

In the short term, since it was easier to get the BIT into a tax deferred retirement account, the fees are probably worth it.

Long term, if bitcoin takes off, there will no doubt be competition, and COIN / other investment vehicles will pop up with lower fees. And since it is in a tax-deferred account, David will be able to roll into one of those investments without taking a capital gain hit.

phoenix1

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Quote from: oda.krell on May 09, 2015, 12:14:43 PM

Quote from: phoenix1 on May 09, 2015, 06:28:28 AM

@ David Rahaby ... as you say you are long-minded (and I believe you) have you considered just how much the management fees will eat into your BTC over the years? IIRC correctly the annual fee is 2% of NAV and it is taken in BTC not USD, so if you start with 100 BTC ...
After 10 years = 81.7 BTC
After 20 years = 66.8 BTC
After 25 years = 60.3 BTC
[...]

Meh, I'm out of my element here (retirement fund and in the US), but isn't this a bit of a simplistic comparison?

As I understand it, the relevant point here is that GBTC is compatible with a Roth IRA, which is (intended to be) tax free, so depending on how capital gains for "raw" Bitcoin holdings are (and will be) taxed, and whether you are planning to pay those taxes (or, if not, whether you get away with it), those "2% per year" could either turn out to be a lot, or not that much.

Someone more knowledgeable on the topic, please feel free to correct me if the above is factually wrong.

Hey, I'm open to being corrected to too Wink

But as I see it, this is not a simplistic comparison - simplistic compared to what ? This is one 'predetermined' side of the coin that any 'investor' needs to consider before putting funds in. I am no expert on retirement funds either, but what is crystal clear is that 40% of your BTC will have been paid away in fees if you hold for 25 years. Period. You might as well call it 'tax' (meet the new gubinment - same as the old gubinment

)

The tax implications of holding it for less than x years or trading in and out of, I have no idea about, other than I would assume that holding it for less time will give less tax relief, if any. Just pointing out that if the motivation is solely 'reduced taxes' and holding period is 'until retirement', you are paying a very high 'tax' for the privelege, one that can only be weighed up against individual circumstances. That's the other side of the coin ... ok ... yeah, that side is not so simple Cheesy

EDIT: If you are unlucky enough to buy at a price that gives you NO capital gains, you will have an extra 40% loss that you would not have incurred otherwise (in the 25 yr scenario)

Topic: GBTC Bitcoin Investment Trust Observer - page 31. (Read 262354 times)