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SEC Formally Accepts BlackRock Spot Bitcoin ETF Application for Review

48 points by Malaalof 3y ago

thread_id 3y ago
Just what we needed. The largest legal crime syndicate in the US legalizing yet another scheme to suck money out the system. Most likely targeting public employee pension funds that for some reason beleive that they need to have risk exposure to all asset classes including the currency of choice for criminal transactions. Great.
- hellyer 3y ago
  Can you elab on the legal crime by Fink's Blackrock?
  - 0xedd 3y ago
    Advocate for closure of nuclear plants in Germany and sign deal to fund coal company. All through shell corps, media and political brib... Sorry, campaign funds.
    - gruez 3y ago
      >Advocate for closure of nuclear plants in Germany and sign deal to fund coal company Advocating for dumb policies isn't a crime. >political brib... Sorry, campaign funds. In other words... they specifically did it in a legal way?
- distortionfield 3y ago
  > the currency of choice for criminal transactions Sorry, that title still belongs to the US Dollar.
- crtified 3y ago
  Can you describe (simplified if necessary) the mechanism by which Blackrock would use this ETF to suck money out of the system?
  - deleted 3y ago
    [deleted]
  - gruez 3y ago
    The only coherent interpretation I can think of is through the management fees they'll charge. Based on existing bitcoin products, it'll likely be in the neighborhood of 1-2%. I don't see the issue with it though. They're providing a service (ie. being able to invest in bitcoin in an institution friendly way), and are charging a fee for it. You may think the service is worthless, but it's still strange to characterize it as "sucking money out of the system". I don't care for fine art, and I think the premium paid for them is worthless, but I wouldn't characterize companies involved in the transaction (eg. Sotheby's) as "sucking money out of the system".
s3p 3y ago
So now you can buy bitboin without actually buying bitcoin... wow. Expose yourself to all the volatility, all the harsh swings and market manipulation by crypto whales, all while owning none of the currency. Sounds awful.
- gberger 3y ago
  Owning actual cryptocurrency is a huge hassle with concerns about key storage, hot vs cold wallets, etc. Investors are much more likely to already have the infrastructure in place to hold an asset like an ETF, so offering bitcoin wrapped in an ETF presents the opportunity to these investors to get exposure to crypto valuations without getting exposed to crypto hacks.
  - Our_Benefactors 3y ago
    > so offering bitcoin wrapped in an ETF presents the opportunity to these investors to get exposure to crypto valuations without getting exposed to crypto hacks. Every few years I hear about a bitcoin ETF and it seems like even worse of a scam than holding cryptocurrency directly. Clearly I’m too dumb (or too smart?) to understand how an ETF can tie itself to the value of bitcoin without also including a freely available redemption mechanism. Does it? If the value of my shares is equal to 1BTC (or whatever other cash out threshold), will they send Bitcoin to an address I specify? Is the ETF fully backed by bitcoin in a publicly auditable fashion?
    - junofan 3y ago
      No, AFAIK the fund sells shares to buy Bitcoin and sells Bitcoin to buy shares.
    - rocqua 3y ago
      There are a few parties (called Authorized Participants) who are allowed to mint ETF shares by handing the fund the underlying, or redeem ETF shares in return for the underlying. These APs are chosen carefully, and have the express job of creating liquidity. They make their money on arbitrage, thus keeping the ETF price closely matched to that of the underlying.
neilv 3y ago
Can anyone summarize in layperson's terms any standards that these securities must meet? For example, is there a standard saying that the thing invested in must being legal? (No ETF based on illegal crack cocaine manufacturing, nor a fund based on illegal human-trafficking?) Is it OK if the thing is imaginary, but everyone just pretends it has value? (Even if Gold is sometimes treated as imaginary convenience, at least it's based on a physical commodity with industrial application.) (Edit: Other than fiat currencies backed by states.)
- coolestguy 3y ago
  >Can anyone summarize in layperson's terms any standards that these securities must meet? No, not even the SEC & that's the cause of major court cases currently. In normal security offerings, there's disclosures coming from the issuing company about financials/profitability etc but btc/eth are peer to peer networks so there's no-one in the middle to do these things & it is very different to normal securities.
  - FireBeyond 3y ago
    > No, not even the SEC & that's the cause of major court cases currently. That's the spin of all the PR the crypto exchanges have put out. However, when it's time to put their money where their mouths are, they don't mention that there's no specific standards (because there is - the Howey Test). Coinbase, for example, has been very loud about this. "We're desperately asking the SEC to help us do this right and they won't!" Except their lawsuit says that they absolutely know how to "do this right", but... > for many tokens, registering is not possible due to effort involved, or not economically viable. i.e. Coinbase doesn't like the cost of having to register securities for the shitcoin du jour - there's no money to be made. But the SEC isn't obligated to make a profitable business model for Coinbase.
    - simple-thoughts 3y ago
      SEC just a few days ago lost most of its case against XRP where it’s strict definition of the Howey test was decided by the judge to be incorrect regarding crypto tokens. The judge did rule for the SEC regarding investment contracts concerning tokens. Most likely the SEC will lose the case against coinbase as well for similar reasons. Just because the SEC says something doesn’t mean it’s true.
otoburb 3y ago
The SEC agreed to review, but as far as I understand this has no bearing on whether they'll approve (or not). I'm not sure why this is news; I thought this is part of the SEC's standard review process?

48 points by Malaalof 3y ago

Just what we needed. The largest legal crime syndicate in the US legalizing yet another scheme to suck money out the system. Most likely targeting public employee pension funds that for some reason beleive that they need to have risk exposure to all asset classes including the currency of choice for criminal transactions. Great.

hellyer 3y ago
Can you elab on the legal crime by Fink's Blackrock?
- 0xedd 3y ago
  Advocate for closure of nuclear plants in Germany and sign deal to fund coal company. All through shell corps, media and political brib... Sorry, campaign funds.
  - gruez 3y ago
    >Advocate for closure of nuclear plants in Germany and sign deal to fund coal company Advocating for dumb policies isn't a crime. >political brib... Sorry, campaign funds. In other words... they specifically did it in a legal way?
distortionfield 3y ago
> the currency of choice for criminal transactions Sorry, that title still belongs to the US Dollar.
crtified 3y ago
Can you describe (simplified if necessary) the mechanism by which Blackrock would use this ETF to suck money out of the system?
- deleted 3y ago
  [deleted]
- gruez 3y ago
  The only coherent interpretation I can think of is through the management fees they'll charge. Based on existing bitcoin products, it'll likely be in the neighborhood of 1-2%. I don't see the issue with it though. They're providing a service (ie. being able to invest in bitcoin in an institution friendly way), and are charging a fee for it. You may think the service is worthless, but it's still strange to characterize it as "sucking money out of the system". I don't care for fine art, and I think the premium paid for them is worthless, but I wouldn't characterize companies involved in the transaction (eg. Sotheby's) as "sucking money out of the system".

s3p 3y ago

So now you can buy bitboin without actually buying bitcoin... wow. Expose yourself to all the volatility, all the harsh swings and market manipulation by crypto whales, all while owning none of the currency. Sounds awful.

gberger 3y ago
Owning actual cryptocurrency is a huge hassle with concerns about key storage, hot vs cold wallets, etc. Investors are much more likely to already have the infrastructure in place to hold an asset like an ETF, so offering bitcoin wrapped in an ETF presents the opportunity to these investors to get exposure to crypto valuations without getting exposed to crypto hacks.
- Our_Benefactors 3y ago
  > so offering bitcoin wrapped in an ETF presents the opportunity to these investors to get exposure to crypto valuations without getting exposed to crypto hacks. Every few years I hear about a bitcoin ETF and it seems like even worse of a scam than holding cryptocurrency directly. Clearly I’m too dumb (or too smart?) to understand how an ETF can tie itself to the value of bitcoin without also including a freely available redemption mechanism. Does it? If the value of my shares is equal to 1BTC (or whatever other cash out threshold), will they send Bitcoin to an address I specify? Is the ETF fully backed by bitcoin in a publicly auditable fashion?
  - junofan 3y ago
    No, AFAIK the fund sells shares to buy Bitcoin and sells Bitcoin to buy shares.
  - rocqua 3y ago
    There are a few parties (called Authorized Participants) who are allowed to mint ETF shares by handing the fund the underlying, or redeem ETF shares in return for the underlying. These APs are chosen carefully, and have the express job of creating liquidity. They make their money on arbitrage, thus keeping the ETF price closely matched to that of the underlying.

neilv 3y ago

Can anyone summarize in layperson's terms any standards that these securities must meet? For example, is there a standard saying that the thing invested in must being legal? (No ETF based on illegal crack cocaine manufacturing, nor a fund based on illegal human-trafficking?) Is it OK if the thing is imaginary, but everyone just pretends it has value? (Even if Gold is sometimes treated as imaginary convenience, at least it's based on a physical commodity with industrial application.) (Edit: Other than fiat currencies backed by states.)

coolestguy 3y ago
>Can anyone summarize in layperson's terms any standards that these securities must meet? No, not even the SEC & that's the cause of major court cases currently. In normal security offerings, there's disclosures coming from the issuing company about financials/profitability etc but btc/eth are peer to peer networks so there's no-one in the middle to do these things & it is very different to normal securities.
- FireBeyond 3y ago
  > No, not even the SEC & that's the cause of major court cases currently. That's the spin of all the PR the crypto exchanges have put out. However, when it's time to put their money where their mouths are, they don't mention that there's no specific standards (because there is - the Howey Test). Coinbase, for example, has been very loud about this. "We're desperately asking the SEC to help us do this right and they won't!" Except their lawsuit says that they absolutely know how to "do this right", but... > for many tokens, registering is not possible due to effort involved, or not economically viable. i.e. Coinbase doesn't like the cost of having to register securities for the shitcoin du jour - there's no money to be made. But the SEC isn't obligated to make a profitable business model for Coinbase.
  - simple-thoughts 3y ago
    SEC just a few days ago lost most of its case against XRP where it’s strict definition of the Howey test was decided by the judge to be incorrect regarding crypto tokens. The judge did rule for the SEC regarding investment contracts concerning tokens. Most likely the SEC will lose the case against coinbase as well for similar reasons. Just because the SEC says something doesn’t mean it’s true.

otoburb 3y ago

The SEC agreed to review, but as far as I understand this has no bearing on whether they'll approve (or not). I'm not sure why this is news; I thought this is part of the SEC's standard review process?