Buying a clear OTCBB company. I guess it will cost several thousands of USD. Then make this company issue more shares to raise money and use the money to buy bitcoin. Then the only asset of this company is bitcoin. People can trade the share of the company to trade the bitcoin.
This company can sell more share to raise more money to buy bitcoins.
Why should we do this?
Because the traditional financial institutions will be able to hold the bitcoin commodity without the legal risk of sending money to Mtgox as of today. You cannot image Goldman Sachs can have an account on mtgox officially. However, GS can buy a share on the OTCBB market. If lots of people have an interest related to bitcoin, there will be more people who will actually use\talk\promote bitcoin in their daily life.
Any Wall Street bankers can do this without any difficult. If you're an Wall Street banker, please make this happen in your company. As you surface on this board, I don't think you can call yourself a big name on the Street today. If you make this happen, However, you WILL be the next star in your firm.
This.
No need to reinvent the wheel. The easiest model to get going for a Bitcoin security is not a bond or an ETF, but a closed-end fund traded on pinksheets (and/or an overseas exchange). This is how gold first got securitized for US investors, during the time when possession of gold was illegal in the US. In 1961 Phillip Spicer bought a bunch of gold/siver in Canada and deposited in a warehouse. He then created a holding company (Central Fund of Canada, AKA CEF) to own the warehoused metals, and then floated the shares of the company on the NYSE and TSX. That way, people in the US could get direct access to a gold-linked investment without having to own the metal itself. The price of each CEF share naturally floats towards its proportional ownership of the gold in the warehouse.
A Bitcoin fund would work similarly. You could start it with a limited quantity of Bitcoins and a structure taken almost verbatim from CEF, with proper audits and so on. Via a reverse takeover or merger with shell company (cost: $35K?) you could then get it floated on US pinksheets. People would buy and sell the stock in lieu of Bitcoins, and the share price would gravitate towards the company's audited Bitcoin holdings divided by number of shares outstanding. Managers of the fund would take a small commission (unlike CEF which requires metal storage costs, management fees would be tiny).
As a closed end fund, it would trade at a premium or discount to its net asset value, but whenever the premium gets too high, the fund simply issues more shares and uses the proceeds to buy more Bitcoins. If NAV gets too low, it sells Bitcoins and does share buybacks. The mechanism is self-correcting, albeit with bigger standard deviations and on a longer timescale than ETF/ETNs. But it's an infinitely simpler structure to get set up versus getting SEC approval for an ETF or bond in the US. The initial Bitcoin holdings can be tiny, so the startup capital required is mostly the legal and listing costs.
More info:
http://en.wikipedia.org/wiki/Closed-end_fundhttp://www.centralfund.com/Unfortunately I'm just an investor and don't have professional experience or contacts in the financial industry, but if I did, I'd be looking into setting this up ASAP, there's undoubtedly going to be big demand for this kind of product.