Topic: If you own 3000 or more Bitcoin, Wall Street wants your advice - page 4. (Read 9891 times)

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

Your apparent re-invention of the Winkelvoss wheel, together with what seems to be your misunderstanding of the basics of the Bitcoin protocol as revealed by your response to User705, are really straining your credibility as someone well prepared for the intersection of traditional finance and Bitcoin. As I've just suggested in a PM, it may be a good idea to take a break from this discussion before you dig the hole any deeper and spend a few minutes reading up on Bitcoin; the Winkelvii have made it clear that they understand entirely the mechanics of holding BTC in trust, while your comments suggest that you do not.

you are creating a CEF for bitcoin?

http://cef.morningstar.com/quote?t=CEF

http://www.centralfund.com/

No, a publicly traded vehicle backed by bitcoin....similar to the ETF the Winkelvoss are attempting.

Coinbase is not a viable option and if you are talking about investors who would purchase something like this it would be after it is listed.

For some there is no point.  For some there is value in having BTC in a widely recognized format.  Right now the teenage girls clothing store The Limited has more value than all bitcoins on planet earth.   

I think and hope it will become a major piece of the global economy but it is very very far from this now in terms of size.  Personally I think for BTC to realize it's potential, larger market cap, wider adoption and price stability is key.

There are tons of dentists, small business owners, all the way up to billionaires and sovereign wealth funds who find the current process hard to understand and who simply won't buy bitcoin.  Eventually many of these people will understand and services like Coinbase will be easier to use -- this number may double, triple or quadruple the amount of assets involved in BTC near term, but it is doubtful that 200-300 times the people and investors will reach this understanding within a year or two. -- Even the US stock market after nearly a century has more participation indirectly through funds, intermediaries etc. than direct purchases.

As for ownership - when someone has shares of a stock in an IRA account they technically no longer own the stock, it is held in a trust and in the name of the trust, not the person.   This is common and is done by millions of people and organizations including every single Fortune 500 company, all of whom have large pension plans with billions of dollars in exactly this format.   Individuals are in the same situation.   (I'm not talking about a trust like this --- in this type of vehicle the shares would remain in the holders name, I'm only using that as an example.)

This vehicle would be publicly traded, likely trade at a premium to the underlying asset, provide leverage, be eligible to placed in tax deferred retirement accounts, could be borrowed against and would be able to appear on standard brokerage and investment statements in any type of brokerage account and would also be insured.

Some people see no advantage whatsoever to this and that's fine, I understand it and this wouldn't be for them.   It's not a fit for small investors, people who want to avoid taxes, people who want no part of the mainstream financial system or people who see no advantage in insurance or borrowing.   Others do see an advantage in insurance, more mainstream asset classes, leverage etc such as people who would like to borrow against BTC etc.

You can disagree on details but it's either dishonest to say that it's not close to true or maybe you just misunderstand bitcoin.  XBT belongs to the person who knows the private key.  The rest is fancy gibberish.  It doesn't matter what offering with what good reputation and what big firm is going to PROMISE to do.  Once you aren't the one in possession of that private key you own NOTHING.  You can dress it up as fancy as you want but the reality will still be the same.  When someone will give/sell/place/donate/partner/ipo XBT to you/firm/vehicle/trust/etf they will no longer "own" that XBT.  They will likely own some sort of a disfigured claim to it but they will "own" 0 XBT.  The whole reason for bitcoin is to eliminate this exact counter-party risk.  It's like trying to shove an internal combustion engine inside a horse.  What's the point?

this has turned into a garbage thread

if you really have these investors who are too old folky to create a coinbase account on their own and you are looking to provide a service to them then why don't you get the good faith of them and be their broker and manage their wallets?

Are you really trying to make some type of 'paper bitcoin' exchange which is why you want to start with such a large amount?

If it is so secretive just buy the bitcoins and do whatever you want with them. 

I'm up on securities laws....I was a FINRA Series 24 General Securities Principal / registered supervisor for 15 years.

Bitcointalk is not close to the type of closed, verified, accredited investor group the SEC permits this type of communication.  No one would construe this as a board limited solely to accredited investors. 

That is referring to something like a website which a hedge fund makes available to people who are accredited by use of a password which they provide when the person has verified that they are accredited or when the fund has proof such as if they are a large institution.   Even then, those communications are not public communications in the sense of mass market like FB, chat boards etc.

This is why there is NEVER a legitimate offering from a legitimate firm discussed in detail on here or any other similar forum EVER....unless they are violating the regulations......this is why Fortress won't come on here with details, BIT would not discuss details and why Cameron Winkelvoss could not discuss anything about his potential offering on his Reddit AMA.

Some firms don't even allow employees to have LinkedIn profiles and many of the largest hedge funds have no website or a simple one-pager.

No idea what you are talking about.

Pretty close, someone could own the whole thing if they set it up and put all the BTC in.  I'm sorry but I'm not going to explain more on a bulletin board.   I know you may take that as secretive or whatever but I can't do it.

Just what non-accredited investors need.   Investing in something that has 5x the vol of gold....
Maybe get them some of the 'higher interest paying' tranches of some CDOs too.
I should have realized we were dealing with a saint here since he is from boston.

The BTC holders would own a portion representing their holdings....I wouldn't own their holdings, buy them etc. in fact they would not even be sold but placed in the vehicle and the BTC holders would own a representative  amount of that vehicle.

What the difference between speaking to me privately or publicly, they are worth the same in a court of law. Unless you forced me to sign a NDA which I will not be doing. I have asked my personal lawyer so I know what I am talking about. He practices in NY.

It's not at all close to the same in the eyes of regulators.   There are very specific definitions of "material communications with the public" and there is absolutely a legal difference between something posted on a public forum, we page, Twitter, public seminar, mailer, tv ad, or Facebook versus something which is not posted to the general public but is communicated privately to a limited audience by way of email, private message, phone, in person etc.

If you are interested ask your lawyer about communications related to securities laws, public offerings and investment professionals and I'm sure he will say the same thing.

Thanks it's for a public offering backed by BTC which would allow much more broad and easy public access to exposure in BTC for retail and institutional investors on a regular open exchange and would be available in standard brokerage accounts, IRA accounts etc.

I believe the listing method is superior to ETFs and the private offerings created by other companies.

Thank you -- like I said, I'm governed by regulations of the investment industry which are very strict about public communications....particularly something that could become an offering.

I'm happy to provide more verification, also provided my real name etc. and even speak to someone who is anonymous and without verification.

I understand people are cautious and if this is not enough, understand.

Well you've got to admit that's being a bit of a troll.

I came on here because I really to want advice and to speak with large BTC holders --- this is supposedly a respected forum and I want to get input from as many people and as much variety as possible.

It would have been much easier to do what my colleagues do and stay in a tiny bubble of acquaintances -- despite the trolls and clowns there is value in connections and input made from public forums.

What input/advice you want? I would like to do this in public. I will not be disclosing how many bitcoins I have control but it is enough to fulfill your requirement.

I am yanking your chain because your post is the equivalent of someone going on craigslist (or pick your site) and asking for all the people that have more than $250,000 in cash or gold in their possession to contact you.  And then you say, I do not need your cash or gold and do not need to use it as security but I need people who keep that much gold or cash.....
You were more entertaining when you got defensive about your resume.

Clever....not sure why you are so focused on wasting time.

I'm not going to argue about proving who I am to anonymous people on a chat board when I've already provided my real name and it's easily verifiable on Linkedin etc.

You are picking apart something you have absolutely no earthy clue about. 

I'm not being cagey but I'm not going to post details on a public forum....if we are involved in an offering at some point this could be construed as a "public communication" by regulators.   Without details you are just making wild accusations and assumptions.