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So what are the expected benefits of a bitcoin ETF? Many of the traditional benefits of ETFs are obsolete when you can just buy and hold an equivalent amount of

So what are the expected benefits of a bitcoin ETF? Many of the traditional benefits of ETFs are obsolete when you can just buy and hold an equivalent amount of bitcoin The biggest benefit I can think of is that some institutional investors have restrictions on the types of securities that they can buy. Someone could solve this by creating a company to buy lots of bitcoin, and then having an IPO to list that company on a public market. Then pension funds would be allowed to buy it, Jane Doe could buy some in her IRA, etc. Any reason this wouldn't be just as good as an ETF?

JumpCrisscross 10y ago
> institutional investors have restrictions on the types of securities that they can buy Those restrictions exist for a reason. Trading unregistered things over-the-counter, e.g. private stock or Bitcoin, carries unique risks. One of those is around fraud. Most investment funds aren't equipped to do fraud diligence (and benefit from not having to do it on ETPs).
dnautics 10y ago
> Someone could solve this by creating a company to buy lots of bitcoin, and then having an IPO to list that company on a public market. Then pension funds would be allowed to buy it, Jane Doe could buy some in her IRA, etc. You're repeating yourself. That is more or less what an ETF is.
- gregshap 10y ago
  Got it thanks, that makes sense. I guess I was expecting this proposal to somehow be more complicated, and didn't realize that the bar is this high for listing a company thats a bucket of X holdings.
piker 10y ago
I can imagine that custody was considered to be a good selling point. If you can get exposure to BTC through an ETF without having to secure your own BTC, there's significant value there. I.e., centralize security in HoldCo, sell shares in HoldCo to give safe access, share security expense and take a small piece off the top for your troubles.
kirse 10y ago
So what are the expected benefits of a bitcoin ETF? The expected benefit is that the Winklevoss twins can now cash-out the $11m+ of Bitcoins [1] on the backs of public sucke-... I mean investors. There's not really any other immediate purpose for this ETF other than that, they've been working to build trust (a currency's only source of value) in Bitcoin for years now in order to add value to their own holdings; they will likely continue to resubmit the proposal [2] until they figure out a way to weasel things through. An ETF would be the ultimate stamp of trust and approval -- having the US gov't essentially validate Bitcoin via SEC approval means that $11m could easily turn into half a billion or more. [1] https://www.washingtonpost.com/news/the-switch/wp/2013/11/09/the-11-million-in-bitcoins-the-winklevoss-brothers-bought-is-now-worth-32-million/ https://www.washingtonpost.com/news/the-switch/wp/2013/11/09... [2] https://www.forbes.com/sites/laurashin/2017/03/10/sec-rejects-winklevoss-bitcoin-etf-sending-price-tumbling https://www.forbes.com/sites/laurashin/2017/03/10/sec-reject...
deleted 10y ago
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Animats 10y ago
So what are the expected benefits of a bitcoin ETF? It was a way for the Winkelvii to do a big Bitcoin dump without crashing the price. That's all, really.

JumpCrisscross 10y ago

> institutional investors have restrictions on the types of securities that they can buy Those restrictions exist for a reason. Trading unregistered things over-the-counter, e.g. private stock or Bitcoin, carries unique risks. One of those is around fraud. Most investment funds aren't equipped to do fraud diligence (and benefit from not having to do it on ETPs).

dnautics 10y ago

> Someone could solve this by creating a company to buy lots of bitcoin, and then having an IPO to list that company on a public market. Then pension funds would be allowed to buy it, Jane Doe could buy some in her IRA, etc. You're repeating yourself. That is more or less what an ETF is.

gregshap 10y ago
Got it thanks, that makes sense. I guess I was expecting this proposal to somehow be more complicated, and didn't realize that the bar is this high for listing a company thats a bucket of X holdings.

piker 10y ago

I can imagine that custody was considered to be a good selling point. If you can get exposure to BTC through an ETF without having to secure your own BTC, there's significant value there. I.e., centralize security in HoldCo, sell shares in HoldCo to give safe access, share security expense and take a small piece off the top for your troubles.

kirse 10y ago

So what are the expected benefits of a bitcoin ETF? The expected benefit is that the Winklevoss twins can now cash-out the $11m+ of Bitcoins [1] on the backs of public sucke-... I mean investors. There's not really any other immediate purpose for this ETF other than that, they've been working to build trust (a currency's only source of value) in Bitcoin for years now in order to add value to their own holdings; they will likely continue to resubmit the proposal [2] until they figure out a way to weasel things through. An ETF would be the ultimate stamp of trust and approval -- having the US gov't essentially validate Bitcoin via SEC approval means that $11m could easily turn into half a billion or more. [1] https://www.washingtonpost.com/news/the-switch/wp/2013/11/09/the-11-million-in-bitcoins-the-winklevoss-brothers-bought-is-now-worth-32-million/ https://www.washingtonpost.com/news/the-switch/wp/2013/11/09... [2] https://www.forbes.com/sites/laurashin/2017/03/10/sec-rejects-winklevoss-bitcoin-etf-sending-price-tumbling https://www.forbes.com/sites/laurashin/2017/03/10/sec-reject...

deleted 10y ago

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Animats 10y ago

So what are the expected benefits of a bitcoin ETF? It was a way for the Winkelvii to do a big Bitcoin dump without crashing the price. That's all, really.