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If the SEC approves it, this would be great news for bitcoin. Assuming the ETF is sufficiently liquid, it would allow: - easy shorting of bitcoins which faci

by ucha 12y ago

If the SEC approves it, this would be great news for bitcoin. Assuming the ETF is sufficiently liquid, it would allow: - easy shorting of bitcoins which facilitate price discovery - lower transaction costs. The cheapest and most liquid exchanges still charge .2% per transaction + spread. Most (all?) of them charge you for getting cash in our out of their platform. Buying shares of an ETF would cost just spread + transaction cost charged by your broker which should be much lower (.0035 per share on Interactive Brokers for example) - easy hedging of a real bitcoin position. Let's say you hold a large fluctuating position in bitcoin that would like to hedge in USD. You could continuously convert all your BTC to USD or go long/short the ETF which is much cheaper.

7Figures2Commas 12y ago
> lower transaction costs. The cheapest and most liquid exchanges still charge .2% per transaction + spread. Most (all?) of them charge you for getting cash in our out of their platform. Buying shares of an ETF would cost just spread + transaction cost charged by your broker which should be much lower (.0035 per share on Interactive Brokers for example) The ETF has an associated Sponsor's Fee, to be paid in Bitcoin, that is not yet known. Also, a few relevant sections from the prospectus: > Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares. > In consideration for the Sponsor’s Fee, the Sponsor has contractually assumed certain operational and periodic expenses of the Trust. See “Business of the Trust—Trust Expenses.” Extraordinary expenses of the Trust (e.g., expenses relating to litigation) and any other expenses that are not assumed by the Sponsor under the terms of the Trust Agreement are borne by the Trust and paid through the sale of the Trust’s bitcoins. Any incurring of extraordinary expenses by the Trust could adversely affect an investment in the Shares. And: > The Trust’s transfer or sale of bitcoins to pay expenses or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution from the Trust. > Each delivery or transfer of bitcoins by the Trust to pay the Sponsor’s Fee or other expenses will be a taxable event to Shareholders. This or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution or dividend payment from the Trust. Any tax liability could adversely impact an investment in the Shares and may cause Shareholders to prepare and file additional tax documents. See “United States Federal Income Tax Consequences—Taxation of US Shareholders.” I don't see how anybody actually taking the time to read the prospectus could come to the conclusion that this ETF will provide a lower cost vehicle for investing in Bitcoin.
- ucha 12y ago
  Transaction costs have nothing to do with the sponsor's fee. If you want to "invest" in bitcoin and by that I mean buy some bitcoins and hold them for years, sure, you shouldn't buy an ETF. If you want to trade bitcoins, you're better off trading a liquid ETF than transacting on Coinbase or Bitstamp. You can have a substantial sponsor's fee of 1%. Let's say you're comparing the ETF to Coinbase - they have a transaction fee of 1% - then as long as you're making more than one transaction a year, you'd rather trade the ETF.
  - 7Figures2Commas 12y ago
    > Transaction costs have nothing to do with sponsor's fee. This is true, but choosing a particular security based on transaction costs alone can be penny wise and pound foolish. Savvy traders are obviously cognizant of the pernicious effects of high transaction costs, but you don't win as a trader by minimizing transaction costs; you win by delivering risk-adjusted returns. If the structure of a security produces lower returns or adds a high level of unnecessary risk, the transaction cost savings can be moot. > If you want to trade bitcoins... I'd argue that it's premature to suggest this is a realistic vehicle to "trade" Bitcoin until we see how well it actually tracks the Bitcoin market. Obviously, it needs to get the green light from the SEC before anyone has the opportunity to do that. > You can have a substantial sponsor's fee of 1%. Let's say you're comparing the ETF to Coinbase - they have a transaction fee of 1% - then as long as you're making more than one transaction a year, you'd rather trade the ETF. No, that's not necessarily true. Again, read the prospectus. Unless you fully understand and are comfortable with the risks associated with the structure of this ETF, the possible consequences of how the Sponsor's Fee and other potential expenses are paid, and the potential conflicts between the parties involved, one might have very good reason to chose a service like Coinbase over the ETF.
- foobarqux 12y ago
  I'm not an expert in ETFs but all the items you highlighted seem like they would be standard in an ETF. All ETFs have fees for example.
unreal37 12y ago
Not sure this is true. The registration documents claim shares can only be traded in 50,000 share blocks (called "Baskets", approx worth $1 million at launch) and you have to be a registered broker-dealer (with a bunch of other rich-people-problem restrictions) to trade. Am I missing something? Or will broker-dealers turn around and sell single shares to the public? Or these statements don't mean what I think they mean?
- foobarqux 12y ago
  APs are responsible for creating and dissolving trust shares in order to keep the share price close to asset value. The shares are traded on an open market, meaning retail investors can trade them. What retail investors can't do is take a bunch of BTC, give it to the trust and get USD back, or vice versa.
  - DrStalker 12y ago
    So the 50,000 "basket" relates to buying and selling bitcoins with the trust, not for end users buying shares in the ETF?
    - justincormack 12y ago
      Yes, thats how ETFs work, splitting retail and wholesale trades out.
- cjbenedikt 12y ago
  It doesn't mean unaccredited investors can't buy/sell it. Once listed anybody can. Every ETF has Authorized Participants http://www.investopedia.com/terms/a/authorizedparticipant.asp http://www.investopedia.com/terms/a/authorizedparticipant.as...

by ucha 12y ago

7Figures2Commas 12y ago

> lower transaction costs. The cheapest and most liquid exchanges still charge .2% per transaction + spread. Most (all?) of them charge you for getting cash in our out of their platform. Buying shares of an ETF would cost just spread + transaction cost charged by your broker which should be much lower (.0035 per share on Interactive Brokers for example) The ETF has an associated Sponsor's Fee, to be paid in Bitcoin, that is not yet known. Also, a few relevant sections from the prospectus: > Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares. > In consideration for the Sponsor’s Fee, the Sponsor has contractually assumed certain operational and periodic expenses of the Trust. See “Business of the Trust—Trust Expenses.” Extraordinary expenses of the Trust (e.g., expenses relating to litigation) and any other expenses that are not assumed by the Sponsor under the terms of the Trust Agreement are borne by the Trust and paid through the sale of the Trust’s bitcoins. Any incurring of extraordinary expenses by the Trust could adversely affect an investment in the Shares. And: > The Trust’s transfer or sale of bitcoins to pay expenses or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution from the Trust. > Each delivery or transfer of bitcoins by the Trust to pay the Sponsor’s Fee or other expenses will be a taxable event to Shareholders. This or other operations of the Trust could result in Shareholders incurring tax liability without an associated distribution or dividend payment from the Trust. Any tax liability could adversely impact an investment in the Shares and may cause Shareholders to prepare and file additional tax documents. See “United States Federal Income Tax Consequences—Taxation of US Shareholders.” I don't see how anybody actually taking the time to read the prospectus could come to the conclusion that this ETF will provide a lower cost vehicle for investing in Bitcoin.

ucha 12y ago
Transaction costs have nothing to do with the sponsor's fee. If you want to "invest" in bitcoin and by that I mean buy some bitcoins and hold them for years, sure, you shouldn't buy an ETF. If you want to trade bitcoins, you're better off trading a liquid ETF than transacting on Coinbase or Bitstamp. You can have a substantial sponsor's fee of 1%. Let's say you're comparing the ETF to Coinbase - they have a transaction fee of 1% - then as long as you're making more than one transaction a year, you'd rather trade the ETF.
- 7Figures2Commas 12y ago
  > Transaction costs have nothing to do with sponsor's fee. This is true, but choosing a particular security based on transaction costs alone can be penny wise and pound foolish. Savvy traders are obviously cognizant of the pernicious effects of high transaction costs, but you don't win as a trader by minimizing transaction costs; you win by delivering risk-adjusted returns. If the structure of a security produces lower returns or adds a high level of unnecessary risk, the transaction cost savings can be moot. > If you want to trade bitcoins... I'd argue that it's premature to suggest this is a realistic vehicle to "trade" Bitcoin until we see how well it actually tracks the Bitcoin market. Obviously, it needs to get the green light from the SEC before anyone has the opportunity to do that. > You can have a substantial sponsor's fee of 1%. Let's say you're comparing the ETF to Coinbase - they have a transaction fee of 1% - then as long as you're making more than one transaction a year, you'd rather trade the ETF. No, that's not necessarily true. Again, read the prospectus. Unless you fully understand and are comfortable with the risks associated with the structure of this ETF, the possible consequences of how the Sponsor's Fee and other potential expenses are paid, and the potential conflicts between the parties involved, one might have very good reason to chose a service like Coinbase over the ETF.
foobarqux 12y ago
I'm not an expert in ETFs but all the items you highlighted seem like they would be standard in an ETF. All ETFs have fees for example.

unreal37 12y ago

Not sure this is true. The registration documents claim shares can only be traded in 50,000 share blocks (called "Baskets", approx worth $1 million at launch) and you have to be a registered broker-dealer (with a bunch of other rich-people-problem restrictions) to trade. Am I missing something? Or will broker-dealers turn around and sell single shares to the public? Or these statements don't mean what I think they mean?

foobarqux 12y ago
APs are responsible for creating and dissolving trust shares in order to keep the share price close to asset value. The shares are traded on an open market, meaning retail investors can trade them. What retail investors can't do is take a bunch of BTC, give it to the trust and get USD back, or vice versa.
- DrStalker 12y ago
  So the 50,000 "basket" relates to buying and selling bitcoins with the trust, not for end users buying shares in the ETF?
  - justincormack 12y ago
    Yes, thats how ETFs work, splitting retail and wholesale trades out.
cjbenedikt 12y ago
It doesn't mean unaccredited investors can't buy/sell it. Once listed anybody can. Every ETF has Authorized Participants http://www.investopedia.com/terms/a/authorizedparticipant.asp http://www.investopedia.com/terms/a/authorizedparticipant.as...