A Simple All You Need To Know Guide About The Winklevoss COIN ETF

I see many people are interested, but unfamiliar with rules surrounding the Winklevoss Coin, bitcoin ETF so I wanted to clear up some confusion people might have by breaking down the ETF, how it will end up being approved or denied and the steps needed to actually make it become tradable on the stock market. However, before we start, what is an ETF and what are the benefits of a bitcoin ETF? An ETF stands for an exchange traded fund which the exact definition according to investopedia.com is

a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange

This means that anyone can buy and trade an ETF without having to have thousands of dollars like you would need to participate in a mutual fund, the costs are usually lower than in a mutual fund and the market you are speculating on is usually more defined.

For bitcoin, the benefit comes with the ability to institutional investors who have large amounts of money and capital, who want to invest in bitcoin, but don’t want to deal with the technical hassle of storing coins on their own, the opportunity to speculate on bitcoin. This is something that not only large institutional investors want, but common people as well who want to buy bitcoin but not worry about storing it or losing it. The Winklevoss COIN ETF would also allow people to exchange their bitcoin into shares or remove them as well, but in baskets of 1000 which is 640k at the moment, so an option that is not available unless you have that much. This would be considered much more mainstream speculation than what is currently going on in the bitcoin market, which is why many think it will raise the price substantially.

So why is the COIN ETF taking so long to be approved?

The coin ETF has been seeking approval for a little over 3 years at this point in time. While originally applying to be listed for the NASDAQ exchange, they moved over to the BATS exchange because of a rule that says the BATS exchange only has a limited amount of time before they are forced to make a final decision on an application.
For the BATS exchange the rule says that after the application there can be two 45 day delays another 60 day delay, then a final 90 day delay but after that, there would need to be a decision made. We were just delayed the second time for 45 days, so in 45 days they will either have to delay it 60 days or make a decision.

Why does the ETF keep getting extended?

The first gold ETF took over 2 years to get approved because the bureaucracy of the SEC is very hesitant to allow new financial products because of consumer protection laws. When it comes to bitcoin and crypto currencies in general, the SEC is pretty unaware of the space and the concept is still alien to many of them. Something to note is the SEC cant actually stop someone from continually applying for an ETF, even after they disapprove it, they can really only give insight on why they are not allowing it. Which would mean that if the COIN ETF was “rejected” the Winklevoss twins could always make revisions and start the application process again.

The biggest criticism of bitcoin by the ETF is clear in the most recent announcement where they extended the period by another 45 days to allow people in various industries to comment on the comments that were made by various people about the ETF. The Sec raised concerns about bitcoin that likened it to a Ponzi scheme or penny stock speculation with no base inherent value. There is also the concern that the Winklevoss twins do not have insurance on the underlying assets within the ETF and despite having a revolutionary cold storage method, it does not seem like enough to persuade the SEC otherwise. There is going to be a 21 day comment period and then another period of review of the comments and although they didn’t specifically give a date of when they are going to address more concerns, extend the date again or make their decision, it should be around the 45 day mark. IMO The Winklevoss twins need to search for insurers who would be willing the insure the underlying assets in either USD or even better, bitcoin at this point to ease any concerns. Note there is another bitcoin etf looking for approval that does have insurance in bitcoin.

What would happen if BATS approved COIN?

If bats approved the COIN ETF, it would mean that they would be able to issue the shares and create all the backend stuff needed for the ETF, but it would not make it tradable. This is debated, but according to several people, the SEC would still need to directly allow the trading of the ETF, but if the exchange is going to let them list it there, there is most likely going to be little push back from the SEC. Hypothetically it could trade in a few weeks after BATS accepts it, but more likely it would be a few months.

So right now we are waiting for the comment period on the 5 comments made in the last few months to start. I fully expect that many anti bitcoin and pro bitcoin people will be fighting it out on the comments, which should be interesting. After that comment period though, there is just going to be more waiting. If the Winklevoss COIN ETF is denied, I don’t know if they will continue to try and have an ETF, heavily change the details of their ETF or seek out insurance. Only time will tell.

If you have any other questions about the ETF leave them below and I will do my best to answer them.

-Calaber24p