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    Default SEC approves a Bitcoin futures ETF

    Bitcoin's First ETF: Winners and Losers:

    The SEC's approval of a Bitcoin futures ETF is good news—for some much more than others.
    By Jeff John Roberts -- Oct 16, 2021

    Well, it finally happened. After more than eight years (!) of pleading by the crypto industry, the SEC has given the go-ahead to a Bitcoin ETF—a move that will give regular folks exposure to the original cryptocurrency via major stock exchanges, and is expected to trigger a moon moment as new money rushes into Bitcoin.

    Will it, though?

    The occasion has already produced winners and losers, which we'll get to in a moment. First, let's recap what exactly happened here. The SEC allowed an ETF (exchange-traded fund), but not one pegged to the price of Bitcoin, the kind most people wanted. Instead, the agency allowed a Bitcoin futures ETF. What this means is the new fund, which is being packaged by a firm called ProShares, won't give you shares backed by Bitcoin, but shares tied a bundle of contracts to buy Bitcoin in the future.

    Sound complicated? It is. When you buy a regular ETF, the value of the shares is based entirely on the price of the underlying asset—be it Bitcoin or gold or oil or a basket of S&P stocks. When you're buying a futures ETF, there are other factors at play that lead the price of the shares to diverge from the asset. As Matthew Hougan, CIO of crypto investment firm Bitwise, explains, savvy futures traders anticipate price quirks like "contango, backwardation and slippage" and make offsetting trades to account for them.

    You can see where this is going. The obvious winners of the new Bitcoin futures ETF will be professional traders and their wealthy clients, who are familiar with concepts like "contango" and are good at making money off it. Indeed, shares of the new ProShares ETF are expected to initially trade at a premium to the actual price of Bitcoin as a result of sophisticated investors who plan to arbitrage future price movements.

    Also in the obvious winner category is ProShares, which will be first out of the gate in this new frontier of crypto ETFs. While competing products are expected to receive the same green light from the SEC as soon as this week, Hougan—who used to run an ETF firm—says being early matters a lot since liquidity will flow to the first mover. So congratulations to ProShares for running the regulatory gauntlet better than its competition did.

    As for losers, you can include retail investors who were hoping to buy a boring Vanguard-style ETF, one that would let them buy Bitcoin just like a stock. What they got instead is an exotic investment option they may not understand, one that will cost them more in fees. Ironically, the reason for this is that SEC Chair Gary Gensler believes the rule that covers futures (and mutual funds) better protects the little people. Okay then. Retail investors who want to buy Bitcoin can still go buy it directly from Coinbase, Robinhood, Kraken, or any number of reputable brokers, but they may balk at what they see as tech hurdles.

    Other losers of the SEC's decision are the likes of Grayscale and Gemini. These companies are among the oldest in the Bitcoin business and have been asking the SEC to approve their ETF applications for years and years—only to see Gensler decide this summer that a futures ETF was the way to go. This comes as a special sting to Grayscale since the company's core product—shares of a trust backed by Bitcoin that trade on the OTC market—is looking increasingly expensive and irrelevant. The company has long been ready to convert its product into a standard ETF but now must hurry up and wait.

    Still, in the big picture, it's safe to say everyone in crypto wins from the SEC's decision. Bitcoin's price stormed back near its all-time-high, and the SEC arguably confirmed what crypto fans have known all along: Bitcoin is real. It is a major league asset that deserves to be recognized by the financial establishment and regulators alike. And the SEC looks more likely to approve a "pure" Bitcoin ETF sooner or later. Then it's only matter of time until we see ETFs for Ethereum, Solana, and other top crypto assets.

    Hougan of Bitwise says Bitcoin ETFs are likely to follow a similar path as the first gold ETF. That ETF had only a minor effect on the price of gold when it launched in 2004, but over the next decade it helped drive the precious metal to unimaginable highs. "The market overestimates the short term impact of ETFs, and underestimates the long one," he says.
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    Default Re: SEC approves a Bitcoin futures ETF

    Quote The SEC allowed an ETF (exchange-traded fund), but not one pegged to the price of Bitcoin, the kind most people wanted. Instead, the agency allowed a Bitcoin futures ETF. What this means is the new fund, which is being packaged by a firm called ProShares, won't give you shares backed by Bitcoin, but shares tied a bundle of contracts to buy Bitcoin in the future.
    I did not see a huge need for a normal BTC ETF because I already bought into a Trust, supported by my online brokerage, which does back the investment in BTC, though minus expenses/liabilities. This allowed me to take part of my 401k funds at retirement and roll them over into a BTC-vehicle rather than traditional stocks which I keep expecting to suffer a major downturn before long.

    My concern with this futures investment vehicle is that it may result in the same sort of market manipulation that the silver and gold markets have with ETFs not backed by any of the underlying assets - paper metals and now paper BTC vehicles oh my!


    GBTC
    GRAYSCALE BITCOIN TR BTC SHS


    Quote Grayscale Bitcoin Trust (BTC) (Trust) is an investment vehicle. The Trust's purpose is to hold Bitcoins, which are digital assets that are created and transmitted through the operations of the peer-to-peer Bitcoin Network, a decentralized network of computers that operates on cryptographic protocols. The investment objective of the Trust is for the Shares (based on Bitcoin per Share) to reflect the value of the Bitcoin held by the Trust, determined by reference to the Index Price, less the Trust’s expenses and other liabilities. The activities of the Trust include issuing Baskets in exchange for Bitcoins transferred to the Trust as consideration in connection with the creations; transferring or selling Bitcoins, Incidental Rights (IR) and IR Virtual Currency as necessary to cover the Sponsor’s Fee and/or any additional trust expenses; transferring Bitcoins in exchange for Baskets surrendered for redemption.
    This is older article but explains what I bought into.

    https://www.investors.com/etfs-and-f...es-what-it-is/

    Quote With the Securities and Exchange Commission shooting down every Bitcoin ETF idea that crosses its desk so far, investors have turned to Bitcoin Investment Trust (GBTC) as a way of gaining exposure to the cryptocurrency.

    Although many publications call GBTC an ETF, it's not — it's a grantor trust. It is not registered with the SEC under the Investment Company Act of 1940 and it doesn't trade on an exchange. It trades on the over-the-counter market, which has less stringent participation rules than exchanges. And unlike most ETFs, GBTC charges a high annual fee of 2% of assets.

    ...

    "The trust is solely invested in Bitcoin and does not hold any other asset, nor does it trade its holdings, have leverage, lending or the like," said Michael Sonnenshein, managing director at Grayscale Investments. "In 2015, through the approval of a Form 211, working with the Financial Industry Regulatory Authority (FINRA) and the OTC Markets Group, we were approved to quote the trust on the OTCQX market, the top tier of the OTC Marketplace.

    After holding shares for one year, investors who purchased shares directly from the trust become eligible to sell their "seasoned" shares into the public market, said Sonnenshein. The rules for selling unregistered shares are listed under SEC Rule 144.

    After shares are sold into the secondary market, any retail investor can buy them.

    "This is highly unusual. Most private placements don't convert into shares that trade OTC," said Kathleen Moriarty, a partner at Chapman & Cutler LLP and, as specialist on 40 Act funds, she was actively involved in the creation of the first ETF, the SPDR. "It's not unique, but it's not common. Not that none do: The rule permits it, but they are made for high net worth individuals."

    With the SEC refusing to allow a cryptocurrency ETF under the 1940 Act, GBTC holds a monopoly as the only U.S.-based investment vehicle that provides direct exposure to Bitcoin through the purchase of a security. This is attractive because it makes it eligible for tax-advantaged accounts such as IRAs, Roth IRAs and 401(k)s.
    Last edited by mountain_jim; 17th October 2021 at 16:28.
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    Default Re: SEC approves a Bitcoin futures ETF

    Quote Posted by mountain_jim (here)
    My concern with this futures investment vehicle is that it may result in the same sort of market manipulation that the silver and gold markets have with ETFs not backed by any of the underlying assets - paper metals and now paper BTC vehicles oh my!
    To the extent that the Money Masters, aka the Elite Bastards, aka the Evil Bastards, retain their upper hand, I share your concern.

    I continue to look forward to seeing the end of their 6,000 (give or take) year reign over humanity ... in my lifetime.

    Then I expect that cryptocurrencies, like other core technologies, some already publicly known and in wide spread use, some yet to be revealed, will become a long term core technology of our civilization, unless some pole shift of the earth's crust sends us back once again to an Adam and Eve time, where starting fires by rubbing stones together once again becomes a core technology.

    My cracked, toy, crystal ball hasn't self vaporized yet ... but the stresses and strains on it continue to expand the cracks.
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    Default Re: SEC approves a Bitcoin futures ETF

    140k bitcoin by end of the month. I will explain in later.
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