Introducing the Winklevoss Bitcoin Trust | FT Alphaville

Introducing the Winklevoss Bitcoin Trust

Click to read - Winklevoss Bitcoin Trust S-1 filing

That’s a SEC filing for the Winklevoss twins’ brand-new Bitcoin exchange-traded fund. For realz.

Some excerpts…

Authorized Participants, or their clients or customers, may have an opportunity to realize a riskless profit if they can create a Basket at a discount to the public trading price of the Shares or can redeem a Basket at a premium over the public trading price of the Shares. The Sponsor expects that the exploitation of such arbitrage opportunities by Authorized Participants and their clients and customers will tend to cause the public trading price to track NAV per Share closely over time. Such arbitrage opportunities will not be available to Shareholders who are not Authorized Participants.


Investors may purchase Shares to hedge existing Bitcoin or other Digital Math-Based Assets, commodity or currency exposure or to speculate on the price of Bitcoins. Speculation on the price of Bitcoins may involve long and short exposures. To the extent that aggregate short exposure exceeds the number of Shares available for purchase (for example, in the event that large redemption requests by Authorized Participants dramatically affect Share liquidity), investors with short exposure may have to pay a premium to repurchase Shares for delivery to Share lenders. Those repurchases may, in turn, dramatically increase the price of the Shares until additional Shares are created through the creation process. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in the Shares that are not directly correlated to the price of Bitcoins.


The Blended Bitcoin Price has a limited history and is based on a weighted average daily price of Bitcoins, using the average of the high and low trading prices on various Bitcoin Exchanges chosen by the Sponsor. The Blended Bitcoin Price will be calculated as of 3:00 p.m. New York time on each Evaluation Day using data collected from the selected Bitcoin Exchanges for the prior [ ] hours. The price of Bitcoins on public Bitcoin Exchanges has a limited, three-year history. During such history, Bitcoin prices on the Bitcoin Exchange Market as a whole, and on Bitcoin Exchanges individually, have been volatile and subject to influence by many factors including the levels of liquidity on Bitcoin Exchanges. Even the largest Bitcoin Exchanges have been subject to operational interruption (e.g., the temporary shutdown of Mt. Gox due to distributed denial of service attacks (“DDoS Attacks”) by hackers and/or malware), limiting the liquidity of Bitcoins on the Bitcoin Exchange Market and resulting in volatile prices and a reduction in confidence in the Bitcoin Network and the Bitcoin Exchange Market.

So here’s an ETF which promises to create $20m worth of liquid exposure to an arguably illiquid crypto-currency by relying on the cooperation of broker-dealers making riskless profits through arbitraging fractions of the virtual coinage.

Something tells us this is one Winklevoss-innovation Mark Zuckerberg won’t be stealing.

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