Your apparent re-invention of the Winkelvoss wheel,
There is more than one way to skin a cat.
There are hundreds if not thousands of ways to create public offerings.
The Winkelvoss are smart guys but as far as I know they have never successfully raised funds for an offering, never been registered or even worked in the investment business and are fairly new to the space.
There are many major disadvantages of an ETF which someone who understands both spaces well can see:
Regulatory- Despite whatever advice Winkelvoss received from the lawyers they paid to set up the vehicle, ETFs have several regulatory hurdles that other vehicles do not....they are learning this now as they are stuck in regulatory limbo.
Trading redemptions: ETFs are required to allow DAILY redemptions.....this means that if there is a panic sell/ crash in the market and BTC is down 25% at 1pm ....then, because of that, $50,000,000 worth of ETF shares are sold by holders of the ETF....then at market close the Winkelvoss would need to sell ANOTHER $50 mm in BTC on the market to meet those redemptions....therefor causing the price to spin further lower....they would not have the luxury of time because the redemptions must be met..this of course causes more of a panic sell, more volatility and is also a logistical nightmare.
Security/ logistics: because of daily purchases and redemptions the security and logistics issues are significant. Someone can literally buy $100 mm of the ETF on the market then sell it again the next day. An EFT would need ready easy access to all those BTC for redemptions totally all holdings backed by public investors because theoretically all those investors could sell. Securing the private keys AND having easy daily access to them is challenging. They cannot simply be locked in a safe offsite....every single day there are net redemptions, someone (actually several people) would need to access those keys. This brings up many other questions of logistics etc.
Volatilty: because of daily purchases and redemptions, volatility would increase and panic sells would be worsened.
I thought of an ETF a long time ago, long before the Winkelvoss announcement and determined that these flaws and the accounting of private keys for tens of millions of dollars daily would be a logistical hassle -- it's possible the regulators agreed and this is why the ETF is now stuck in limbo.
It's a great idea but I believe there is a better way.
For the vehicle I'm researching it would employ some of the features similar to a REIT, Real Estate investment Trust and could trade daily on the open market but not be subject to daily redemptions (because holders would sell shares to other investors, not the fund as is the case with an ETF).
EDIT / added : I'm confident there are better options than EFT -- however, the Winkelvoss bros might very well have solved these issues in some way I'm not aware of and their vehicle may not have the need for them to do daily redemptions --- I won't negatively judge the details without knowing more than what has been listed in their documents because I don't think it's prudent to judge things unless one has facts
No one has to sell because of ETF redemptions. They just need to deliver BTC to the redeemers.
You really have no fucking idea what you are talking about.