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.
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.
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".
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.
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.
> 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?
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.
> An investment in Shares is: Backed by bitcoin held by the Bitcoin Custodian on behalf of the Trust.
> Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must be a registered broker-dealer, a participant in DTC, have entered into an agreement with the Sponsor and the Trustee (the “Authorized Participant Agreement”) and be in a position to transfer bitcoin to, and take delivery of bitcoin from, the Bitcoin Custodian through one or more accounts. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of bitcoin in connection with such creations or redemptions. A list of the current Authorized Participants can be obtained from the Trustee or the Sponsor.
This is all very standard and no more or less of a scam than other ETFs.
In the case of the BlackRock ETF it’s in the application. “Baskets may be created or redeemed only by Authorized Participants who pay BlackRock Investments, LLC”.
No you can’t personally physically redeem the Bitcoin yourself. That’s not the purpose and use of this ETF.
I think there's no buying X involved with an index ETF over X, in general, and I believe they are talking about an index etf here. (Of course, it still is some sort of gamble to trade in an index ETF.)
I see you've never had a conversation with a company interested in holding crypto assets but upon further investigation, realize it's essentially impossible given the way business is structured.
Custody is a spectrum, self custody is more towards cyber punk than white collar. People clearly want these assets and I predict the Bitcoin etf, when finally launched, will have the largest opening volume of any etf ever.
Will the ETF units work better for these companies than the contracts CME offers? Why is that? Because they don't need to be rolled over? Because they're smaller fractions? Because they're fully collateralized?
Not rolling should help a lot. Also, having the price set by continuous arbitrage instead of discrete auctions might reduce slippage. I recall the futures were trading at quite the discount to real bitcoin prices.
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.)
>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.
> 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.
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.
Just because a judge says something doesn’t make it true either. I’m sure the case will be appealed and, until a final verdict is given, nothing has been settled.
Something being illegal means you can’t trade it legally.. so that doesn’t make sense.
It’s like saying what age can you legally smoke? OK there’s a legal age for smoking and cigarettes aren’t banned. Then you’re asking what age can you take illegal drugs? You can’t, they’re illegal.
ETFs usually consist of legal equities, bonds, currencies, real estate, commodities.
>Is it OK if the thing is imaginary, but everyone just pretends it has value?
Yes it's okay. When people pretend something imaginary has a value then it has a value. That's how money, bonds, deeds, loans, contracts, equity, etc work.
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?
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[ 3.7 ms ] story [ 62.1 ms ] threadAdvocating for dumb policies isn't a crime.
>political brib... Sorry, campaign funds.
In other words... they specifically did it in a legal way?
Sorry, that title still belongs to the US Dollar.
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?
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.
> An investment in Shares is: Backed by bitcoin held by the Bitcoin Custodian on behalf of the Trust.
> Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must be a registered broker-dealer, a participant in DTC, have entered into an agreement with the Sponsor and the Trustee (the “Authorized Participant Agreement”) and be in a position to transfer bitcoin to, and take delivery of bitcoin from, the Bitcoin Custodian through one or more accounts. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of bitcoin in connection with such creations or redemptions. A list of the current Authorized Participants can be obtained from the Trustee or the Sponsor.
This is all very standard and no more or less of a scam than other ETFs.
In the case of the BlackRock ETF it’s in the application. “Baskets may be created or redeemed only by Authorized Participants who pay BlackRock Investments, LLC”.
No you can’t personally physically redeem the Bitcoin yourself. That’s not the purpose and use of this ETF.
https://www.investor.gov/introduction-investing/investing-ba...
I think there's no buying X involved with an index ETF over X, in general, and I believe they are talking about an index etf here. (Of course, it still is some sort of gamble to trade in an index ETF.)
Custody is a spectrum, self custody is more towards cyber punk than white collar. People clearly want these assets and I predict the Bitcoin etf, when finally launched, will have the largest opening volume of any etf ever.
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.)
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.
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.
Just because the SEC says something doesn’t mean it’s true.
As it is, the SEC has been implementing the Howey test as a result of that precedent.
Now, you can certainly argue that the Howey test is flawed or incomplete or... but that's separate to arguing that the SEC is misapplying the test.
It’s like saying what age can you legally smoke? OK there’s a legal age for smoking and cigarettes aren’t banned. Then you’re asking what age can you take illegal drugs? You can’t, they’re illegal.
ETFs usually consist of legal equities, bonds, currencies, real estate, commodities.
Yes it's okay. When people pretend something imaginary has a value then it has a value. That's how money, bonds, deeds, loans, contracts, equity, etc work.