Tag Archives: bitcoin ETF

blockchain-etfs
ETF News, Tech Talk

Blockchain ETFs Debut-It’s About The Blockchain, Blockhead, Not Bitcoin!

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What’s Next for exchange-traded-fund land? Blockchain ETFs! Duh?! Aside from the efforts by the Winklevoss Boys and a cadre of others to introduce a Bitcoin ETF, Blockchain companies (now known as ‘blocktech’ firms) fall into the sweet spot for fintech investors and public companies that are pivoting, re-purposing or adding to their value proposition with a blockchain-based approach to enhancing e-commerce, big data applications or other tools are top candidates for an exchange-traded fund dedicated to the world of crypto and distributed ledger.

As noted by ETF.com, “..Today sees the debut of two Blockchain ETFs focused on blockchain technology, the first blockchain exchange-traded funds of their kind. The actively managed Amplify Transformational Data Sharing ETF (BLOK) lists on the NYSE Arca and comes with an expense ratio of 0.70%, while the index-based Reality Shares Nasdaq NexGen Economy ETF (BLCN) lists on the Nasdaq and comes with an expense ratio of 0.68%…”

In case you’ve been hiding under a brick for the past many weeks, blockchain technology is in the spotlight due to the mania surrounding bitcoin and other cryptocurrencies. If you were not aware, blockchain technology is the engine that powers the sauce that goes into cryptocurrencies. To coin the phrase (pun intended, courtesy of MarketsMuse top pundit), “Its all about the blockchain, Blockhead! Not the bitcoin!” –meaning the blockchain is foundation to wider applications, not just supporting digital money. In other words, blockchain serves as a “distributed ledger” that provides a secure and unalterable record of transactions that have taken place and other key pieces of information, storing them in linked blocks of data. Think of blockchain as a multi-dimensional spread sheet that lives in real-time and is refreshed with every interaction by those who are enabled to access the application. The bitcoin or token element is therefore the key or passport to accessing the spread sheet. So, it seems to make sense that as more companies seek to leverage this new generation technology, there will be more prospective candidates for blockchain ETFs, which are likely to morph.

ETF.com commentary profiling the new listings continues with “..BLOK was actually the first blockchain ETF to go into registration. The fund can invest in domestic and non-U.S. securities, including depositary receipts, according to the prospectus. It will focus primarily on firms that are developing or using blockchain or similar technologies.

According to Christian Magoon, founder and CEO of Amplify ETFs, developments among the companies in his firm’s Amplify Online Retail ETF (IBUY) alerted him to the fact that cryptocurrency was an emerging trend.

“That started to get us interested in the blockchain equities side of things given the potential of blockchain technology to disrupt; it certainly seems to have potential that is almost similar to the internet’s,” Magoon said.

The range of companies allowed in the portfolio covers those engaged in research and development, and the implementation of blockchain and similar technologies; those profiting directly and indirectly from demand for such technologies; those partnering with companies engaged in blockchain research, development and implementation; and those that belong to consortiums or groups formed to explore the potential of such technologies. Companies must also meet minimum size, price and liquidity thresholds.

Further, the portfolio managers consider the depth of the involvement of companies when selecting them for inclusion in the portfolio, classifying those that are selected as either “core” or “secondary” companies based on their activities, the prospectus said.

Magoon describes the fund’s strategy as “skating where the puck will be.”

“We think companies that are leaders today in researching, investing in or receiving revenue from blockchain are going to be well-positioned for tomorrow—similar to companies that engaged in internet technology early on,” he said.

Magoon’s firm offers actively managed and index-based ETFs, but he believes active management is particularly important for a fund such as BLOK.

“Our key differentiator is that we believe you have to be active when you engage in this space. In order to capture the upside and manage downside risk, you have to be, on a daily basis, looking at this and adjusting your portfolio,” he said, noting that a manager can slowly build or unwind positions, whereas index funds tend to make very binary decisions regarding including or selling a company. Further, while an index fund must wait until its scheduled rebalancing to reflect changes in the market, an active fund’s manager can react immediately.

 

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crypto-hedge-funds
ETF News, Global Macro Strategy, Strike Price, Tech Talk

Crypto Hedge Funds: Greenwich Crowd Buying Into Bitcoin Trading

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Crypto Hedge Funds Get Their Greenwich On. If the MarketsMuse curators have avoided bidding on and publishing tick-by-tick coverage of “crypto mania” and bitcoin bubblelicious bytes akin to our media industry brethren, its only because we were arguably a pioneer when, starting in 2014, we first started framing the bitcoin and distributed ledger evolution under the label fintech. OK, one of our editors was conflicted–having purchased a few bitcoins back when paying $100 for the cryptocurrency caused laughter from peers with CT license plates on their Teslas. What a difference a day makes (ok, lets call it a few hundred days).

Every famous hedge fund wonk, from Steven Schonfeld to “Stevie” Cohen, and tens of dozens of others have either carved out a crypto trading strategy or are planning to do so. After all, volatility is every trader’s elixir and now that CME, CBOE, NASDAQ and as of Dec 20 announcement, NYSE ARCA have all blessed bitcoin, the opportunity to trade crypto derivatives on a regulated exchange is impossible to resist for the ‘hedgies.” Even Thomas Peterffy, the hard-charging Republican and multi-billionaire founder of Interactive Brokers, has walked back on his earlier position in which he said he would not allow IB customers to trade bitcoin products; now they can when they post the required margin. Hey, Thomas’s membership fees at Mar-a-Lago are going up and if bitcoin trading can create a new commission silo for the “Professional’s Gateway to the World’s Markets”, it makes sense to get in on the action. (Breaking News: NYSE ARCA TO LIST 2 BITCOIN ETFS).

As reported by WSJ’s Dec 20 column, “Big Hedge Funds Want In On Bitcoin”-— Already, there are around 20 funds, managing a total of roughly $2 billion in assets, that solely or predominantly trade cryptocurrencies, as tracked by an index compiled by Chicago-based data group HFR. The asset total highlights how it has largely been smaller funds that have traded bitcoin, though HFR President Kenneth Heinz says the number of funds could double in size in the first quarter of 2018.

OK $2b is “Peanutsville” when it comes to the trillion dollar  hedge fund industry which deploys capital across multiple asset classes and strategies.  But, according to the WSJ story, as well as off-line conversations with HF titans,  lots of folks who might have been allergic to peanuts are now looking to put on spreads with LEAP style maturity dates.

Lest one  forget, a whole bunch of smarty pants types in VC land dismissed two twins by the name of Winklevoss for claiming to have been the brains behind Facebook. Even their lawyers laughed at them when they insisted on taking then private shares in FB instead of $50m in cash when Mark Zuckerberg offered to settle the ‘misunderstanding.’ The shares soon became worth $300m and the twins then parlayed some of that into buying up 1% of the bitcoin market. The Winklevoss boys were laughed at again when they were the first to file for a bitcoin-based exchange-traded fund (ETF).  As their initial $10m stake in bitcoin blossomed into $1 Billion (on paper), those twins also created what is viewed as the most robust electronic exchange in the bitcoin ecosystem and is arguably worth as much as $1b also–just because someone would likely pay that much to take over the system.

Evan Fisher of Prospectus LLC, a global consulting firm that provides hedge fund set up guidance, business plan writing services, preparation of investor offering documents and more recently, whitepaper writing and ICO offering documents, sums it up by saying, “The calculus for hedge fund players allocating risk to this new asset class is pretty simple, if their peers are diving in, they need to.”

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ETF News

Bitcoin Price Surge in Advance of SEC Decision to Approve Bitcoin ETF

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Speculators betting on the SEC approving the very first Bitcoin ETF listing helped push the price of the digital currency aka crytopcurrency to a record high in advance of a March 11 SEC meeting in which regulators are scheduled to determine whether the Winklevoss Bitcoin Trust ETF [proposed ticker NASDAQ:COIN] is fit for every day investors to purchase and trade on public markets.  In over-the-counter trading on Friday, the price of a single bitcoin soared to as high as $1,200 per bitcoin i Europe’s Bitstamp exchange, before easing to about $1,190. Aggregated bitcoin exchange prices pegged the price at closer to $1174. That put the total value of all bitcoins in circulation — or the digital currency’s “market cap”, as it is known — at close to $20 billion, around the same size as Iceland’s economy.

bitcoin-etf-sec-decision-marketsmuseThe bitcoin ETF is the brainchild of Harvard-educated investors Cameron and Tyler Winklevoss, the twin brothers who for years claimed to be the genius behind the creation of Facebook (NYSE:FB). The pair first submitted their initial offering prospectus for a bitcoin exchange-traded fund nearly four years ago. They have since modified the offering documents several times in an effort to appease securities regulators. If approved, everyday investors will have simple access to the cryptocurrency on a major exchange for the very first time, which would no doubt legitimize Bitcoin’s existence and according to some, likely push its value much higher.

Two other prospective bitcoin ETF issuers have more recently filed offering prospectuses with the Securities & Exchange Commission. SolidX Partners sought SEC approval last July for its bitcoin ETF, SolidX Bitcoin Trust , which also would be listed on the NYSE. In January, Grayscale Investments filed to list its own Bitcoin Investment Trust on the NYSE.

According to ETF Daily News, “A ten-day rally for the cryptocurrency has narrowed its gap with the precious metal to the smallest on record. Each asset has been touted as an alternative to regular currencies, because of constraints on their supply and the capacity they offer to sidestep governments.”

bitcoin-price-vs-gold-price

First invented in 2008, the price of a bitcoin has performed better than any other currency in every year since 2010 apart from 2014, when it was the worst-performing currency, and has added almost a quarter to its value so far this year.

Per ETF Daily News, many hurdles remain for the ETF to pass regulators’ tests. “The SEC is worried about Bitcoin’s safety, security, volatility, and shareholder protection. “Traditional financial players have largely shunned the web-based “crytpocurrency,” viewing it as too volatile, complicated and risky, and doubting its inherent value. ” On the other hand, some analysts say regulatory approval of a bitcoin ETF would make the currency relatively attractive to the often more cautious institutional investor market.

But despite potentially high returns, low correlations with other currencies and assets, falling volatility and increasing liquidity, there is scant evidence so far that most major players are considering investing in the digital currency.

“Bitcoin is just not liquid enough for us to even think about,” said Paul Lambert, fund manager and head of currency investment at Insight, in London.

“We manage billions and billions of dollars we’d need to be able to go into that market and trade in hundreds of millions of dollars at a time, and my sense is it’s not like that.”

 

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ETF News, People Profiles

Bitcoin ETF: Navigating SEC Spider Web: Spider Woman

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Call it a Rat’s Nest, a Rabbit Hole, or a Rubik’s Cube, but no certified marketsmuse can dispute the fact the ETF industry has become a Spider’s Web of complexity when it comes to the assortment of products being promoted. And, who more qualified to advocate on behalf of a Bitcoin ETF than Kathleen Moriarty, who is often referred to as the Spider Woman of the ETF marketplace for her long history of traversing the SEC in the course of championing innovative products.

(Reuters) –When one of the first exchange-traded funds launched in 1993, securities lawyer Kathleen Moriarty received a gift from her legal assistant: a Spider-Man comic-book cover altered to depict the superhero facing off against a hulking Securities and Exchange Commission.

kathleen-moriarity-bitcoin-etf-lawyer
Kathleen Moriarty, Esq. (photo courtesy of Reuters)

Twenty-three years later, Ms. Moriarty’s ability to navigate the arcane rules that govern financial markets and products has built her a reputation as a top lawyer in the ETF business and earned her the nickname “Spider Woman.” Her latest challenge is convincing regulators that a bitcoin ETF is appropriate for the market. That isn’t necessarily an easy sell, given the explosion of ETFs across the market and their fraught role in a market meltdown last August.​

“I tend to concentrate on more exotic products,” Ms. Moriarty said. “Zero of my plans include retirement.”

ETFs have grown to become one of Wall Street’s most popular product categories by offering investors low-fee access to wide swaths of the market.​Investors had close to $3 trillion in assets across nearly 4,500 ETFs globally as of March, according to London-based research firm ETFGI.

“I don’t think anyone would have thought it was going to be this big,” said Ms. Moriarty, a partner at Kaye Scholer LLP, in an interview this year at her Midtown Manhattan office, which was adorned with decorative arachnids and the framed comic.

Ms. Moriarty, who turned 63 Tuesday, helped launch what is still the largest U.S.-listed exchange-traded fund—the SPDR S&P 500 ETF, or SPY—paving the way in 1993 for a booming industry.

“If you’re going to try to do something unique and novel in that space, you’re going to call Kathleen,” said Jim Ross, who heads State Street Global Advisors’ line of SPDR ETFs.

ast year, the agency proposed new rules that could limit ETFs’ growth and even slim down the current lineup, such as curbing the use of derivatives by mutual funds and ETFs and limiting their holdings of assets that are illiquid, or tough to buy and sell.

An SEC spokeswoman declined to comment for this article.

Ms. Moriarty said regulators’ concerns about the products’ proliferation is “extreme.”

“How many more mutual funds do we need? Nobody ever asks that question,” said Ms. Moriarty. (There are more than 8,100 mutual funds and about 1,600 ETFs in the U.S. as of February, according to the Investment Company Institute, a fund industry group.)

Ms. Moriarty cited bitcoin’s volatility as a risk in the filing she co-wrote. She said her proposed ETF’s structure is similar to that of the $32 billion exchange-traded gold product, the SPDR Gold Trust, that she helped launch in 2004 because it aims to give investors access to the commodity without having to hold it. The fund, GLD, has risen sharply along with gold prices this year.

“I’m optimistic,” Ms. Moriarty said about the bitcoin application.

ETF News, Tech Talk

Change is Coming: What to Expect With Bitcoin ETF

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MarketMuse update courtesy of Inside Bitcoins’ Kyle Torpey. 

Much of the bitcoin community is excited at the prospect of a bitcoin ETF due to the assumption that it could bring many new speculators into the market. After all, if everyone with access to assets traded on the NASDAQ can just as easily trade bitcoin in the same account as their other investments, it’s possible that more traditional investors may take a shot at the digital currency.

While there’s been plenty of attention on the possible Winklevoss bitcoin ETF, there hasn’t been much discussion on the effect the ETF could have on current bitcoin exchanges. Once traders have access to a regulated bitcoin ETF on the NASDAQ, why would they spend time trading on one of the frequently-hacked bitcoin exchanges?


Trading fees and unique trading options

I reached out to BTC China Senior Business Development Manager Greg Wolfson to get his reaction to the possibility of a bitcoin ETF becoming a reality in the near future. When asked what a traditional bitcoin exchange can offer that won’t be found with a bitcoin ETF, Wolfson was quick to point to zero-fee trading. The trend of offering free trading has become a popular way for new bitcoin exchanges to make a name for themselves, and this is something that simply cannot be offered by a bitcoin ETF.

When trading an ETF, you’re always going to have to pay brokerage fees and the expense ratio, which is used to pay the costs of operating the ETF. For example, GLD — on which the Winkless ETF is based — has a 0.40% expense ratio. You can bet that a bitcoin exchange will not charge you money simply for holding onto your bitcoins throughout the year — although leaving your bitcoins on an exchange for long periods of time is also not recommended.

“On the other hand, the the ETF will be regulated by the SEC and therefore, open to many types of institutional investors that are otherwise prohibited from investing in bitcoin.”

Wolfson went on to explain certain trading options that are unique to bitcoin exchanges in his full response on the matter:

“An ETF may best fulfill the needs of individuals who want to simply hold bitcoin, but exchanges still offer a diversity of trading options that set them apart. Zero-fee trading, derivatives, cross-trading with altcoins, and direct access to BTC, to name a few. On the other hand, the the ETF will be regulated by the SEC and therefore, open to many types of institutional investors that are otherwise prohibited from investing in bitcoin.”

Access to actual bitcoins

Direct access to bitcoins was another feature of bitcoin exchanges mentioned by Greg Wolfson. While you’re purchasing actual bitcoins on a traditional bitcoin exchange, such as BTC China, you’re only purchasing shares of assets owned by someone else when you buy an ETF. You cannot trade your ETF shares for actual bitcoins. If you’re looking for ownership over physical bitcoins rather than exposure to the bitcoin price, then a traditional bitcoin exchange — or even an OTC trade — will be a better option.

What about insurance?

Although Wolfson did not mention insurance in his comments regarding the bitcoin ETF, it’s possible that this could be another opportunity for bitcoin exchanges. As mentioned in a previous article, there is no insurance to be found for shareholders of the Winklevoss Bitcoin Trust (COIN).

As we’ve seen in the past — and as recently as a few weeks ago with the Bitstamp hack — thefts are a rather common occurrence in the bitcoin world. An exchange that decides to offer insurance for all deposits — outside of user error — could offer peace of mind to the paranoid trader who doesn’t want to worry about a possible MtGox fiasco. The only bitcoin companies that seem to be bragging about their insurance coverage publicly are Coinbase, Xapo, and Circle; none of which are useful for even moderately high frequency trading.

For the original article from Inside Bitcoins, click here

ETF News, Tech Talk

Europe’s First Bitcoin ETF Comes Courtesy of UK-Based Exchange “Coinfloor”

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coindesklogo1    MarketsMuse salutes the news reporting below courtesy of industry news publication CoinDesk and reporter Daniel Palmer

Coinfloor has revealed plans to launch a bitcoin exchange traded fund (ETF) and accept additional fiat currencies as part of its efforts to expand internationally.

Starting immediately, the UK-based bitcoin exchange is allowing customers to make deposits in US dollars, euros and Polish zloty, in addition to the British pound.

The company framed the move as a way for it to transition from a UK-only exchange to a global player in the wider market for bitcoin exchanges.

Adam Knight, chairman and investor with the exchange, said:

“By expanding to dollars, euros and zloty, we are expanding from a UK-only focus to an international one, delivering more value to our UK customers and growing our user base internationally.”

Global plans Continue reading →

ETF News, Tech Talk

Bitcoin: Now Coming To a Trading Screen Near You?

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bitcoin  MarketsMuse Editor Note: On the heels of the recent announcement that the proposed Bitcoin ETF aka “Winklevoss Bitcoin Trust” with slated ticker symbol COIN is about to be bankable by ETF traders and investors, below extract courtesy of Traders Magazine Online News, July 15, 2014, written by Gregg Wirth

Bitcoin, the crypto-currency that initially became infamous as the tender of choice for drug traffickers and mercenaries, may be coming to a trading desk or institutional portfolio near you – and sooner than you think.

“2014 is going to be the year Bitcoin hits Wall Street,” said Barry Silbert, founder and CEO of SecondMarket, a capital-raising platform for private companies and investment funds. Indeed, there is a growing consensus in some corners of Wall Street and the buyside community that the $7.8 billion  Bitcoin industry is going to become the new, flashy darling of investors, with dedicated digital currency funds, venture capitalists and asset managers all chasing after those 12 million bitcoins currently in circulation.

“Digital currencies like Bitcoin are not going away,” Silbert explained. “And Wall Street and the regulators know this, they’ve studied how to deal with it, and now they are starting to understand its potential.” SecondMarket has gone heavy into the Bitcoin phenomenon, launching the Bitcoin Investment Trust, a $70 million open-ended trust that invests exclusively in bitcoins, as well as a dedicated desk of 10 traders who buy and sell bitcoins for the trust and other institutional clients. SecondMarket is also creating what it hopes to be the largest, best-capitalized and well-run Bitcoin exchange in the U.S., and is enlisting banks and Bitcoin-related firms to be exchange members. Continue reading →

ETF News

Batter Up: Bitcoin ETF aka Winkdex Readies Major League Launch

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nyt_dealbook_gCourtesy of Nathaniel Popper

Stock traders have the Standard & Poor’s 500. Bitcoin bettors will have the Winkdex.

The new financial index takes its name from the Winklevoss brothers, famous for their legal battle with the Facebook founder, Mark Zuckerberg. The Winkdex was released publicly on Wednesday and provides a regularly updated figure for the price of Bitcoin, the virtual currency that has risen in popularity over the last year.

Tyler and Cameron Winklevoss announced the creation of the Winkdex in a regulatory filing they made on Wednesday to the Securities and Exchange Commission in connection with the Bitcoin exchange-traded fund they first applied to create last summer.

The new filing shows that the Winklevoss Bitcoin Trust is moving closer to regulatory approval despite skepticism in some investor circles. The brothers are now hoping to start the fund later this year, making it the first Bitcoin E.T.F.

For the entire article from the New York Times, please click here.