Winklevoss Bitcoin Fund: Dumb Money or Good Idea?Tyler and Cameron Winklevoss will know within days whether they’ve won approval to begin offering their bitcoin-based exchange traded fund, with the digital currency’s record rally hanging in the balance.Officials from the U.S.Securities and Exchange Commission met with the twins on Feb.14 to discuss their proposal for an ETF based on the digital currency, according to a short notice of the meeting published on Feb.A decision is due by March 11.The 35-year-old twins want to trade the security on the Bats BZX Exchange Inc.An approved ETF would make bitcoin investing simple for small traders and institutions, while potentially boosting the digital currency just as it’s hitting new highs almost daily.Some $300 million could pour into a bitcoin ETF in its first week, Spencer Bogart, head of research at venture-capital investor Blockchain Capital, said in an interview.“I’d be very surprised if it did anything but double from whatever levels it is at beforehand,” Bogart said.Bitcoin rose as high as $1,263.49 on Thursday, an intraday record, passing the price of an ounce of gold.

It has gained 28 percent this year, as investors worried about global uncertainties and speculated on a more relaxed regulatory environment for the currency under President Trump.Hopes for the ETF have been a factor as well.The Winklevoss Bitcoin Trust is one of three such vehicles seeking regulatory approval -- and the advantages that come with being first.The others are Bitcoin Investment Trust, a creation of Barry Silbert, who had previously built a market for selling shares in private companies, and SolidX Bitcoin Trust.Digital Asset Services, the sponsor of the Winklevoss ETF, declined to comment.Silbert and Ivan Brightly, chief operating officer of SolidX, also wouldn’t comment.The Winklevoss twins may be best known for accusing Facebook founder Mark Zuckerberg of stealing their idea for a social-media network, a case they ultimately settled.SEC approval could give enormous power and riches to the winner for years to come.Just look at gold: SPDR Gold Shares ETF, started in 2004, has more than four times higher the market value of iShares Gold Trust ETF, started in 2005.

“This is the first-to-market race,” Chris Burniske, an analyst at Ark Investment Management LLC, said in an interview.Cameron Winklevoss, left, and Tyler Winklevoss Trading bitcoin now is no easy thing.Investors have to open bitcoin wallet accounts, then purchase bitcoins via online exchanges.Or they can invest in Bitcoin Investment Trust, which trades over the counter, often at a hefty premium to the cryptocurrency.A last possibility is Ark, which operates an ETF with 5 percent exposure to blockchain -- the database technology underlying bitcoin -- and peer-to-peer computing.With a publicly traded ETF, small investors could just call their brokers or buy shares online.Approval is by no means certain.On BitMEX, a contract betting on approval of the Winklevoss Bitcoin Trust spiked to an all-time high of 70 percent on Feb.28, before crashing to 53 percent on March 1.Neena Mishra, director of ETF Research at Zacks Investment Research, pegs the chances at 40 percent.The biggest unknown is whether the regulators will conclude that bitcoin, a digital currency created on and managed by computers, lends itself to being a part of an ETF at all.

Whether it’s secure enough, for example.Gox had many of its bitcoins stolen several years ago.Last summer, a project running on a blockchain technology similar to bitcoin’s got hacked and lost millions of dollars of investors’ funds.Read more: You Can Bet On Whether the SEC Approves the First Bitcoin ETFBitcoin has similarities to currencies, as well as commodities like gold -- since there’s a limited number, it could be considered a scarce resource.bitcoin meetup nycWhat ultimately matters is how the SEC sees it.“Bitcoin is not a stock, it’s not a bond, it’s not a hard asset like precious metal, it’s not a commodity future,” Ben Johnson, director of global ETF and passive strategies research at Morningstar Inc., said in an interview.bitcoin price data excel“It’s a technology that’s very much in its infancy, and it’s not something that in my mind lends itself to being packaged as an ETF.”An SEC rejection of the Winklevoss proposal could help one of the other bitcoin ETFs seeking regulatory approval.“If the Winklevoss (ETF) gets rejected, they’ll get a brief explanation, which will help the other guys figure out how to get theirs through,” said Adam Wyatt, chief operating officer at BullBear Analytics, a researcher focused on bitcoin and other digital currencies.harga bitcoin hari ini

“If it’s approved, all the other guys copy that and do whatever needs to be done to get approved.”Bitcoin Investment Trust, which filed in January to list on the NYSE Arca, already trades over the counter.Bank of New York Mellon is the trust’s transfer agent.litecoin price australiaAnd SolidX has a big differentiator: It promises to insure its bitcoins from loss -- something that could boost its chances of approval, Zacks’ Mishra said.bitcoin ukash paysafecardThe Winklevoss’s ETF, which first filed with the SEC in July of 2013, has amended its S-1 filing multiple times over the years to address regulators’ concerns.define bitcoin walletIt’s represented by the law firm of Ropes & Gray.The twins have also secured State Street Bank & Trust Co.

as the administrator of the trust.They already operate the Gemini cryptocurrency exchange, catering to institutional and retail investors.“All that adds up,” Eric Balchunas, an ETF analyst at Bloomberg Intelligence, said in an interview.“If they are going approve one, it’s going to be Winklevoss first.And they kind of deserve it.”It’s called the SolidX Bitcoin Trust and its S–1 was filed with the SEC today.The most interesting contrast between the two proposed funds is what happens if their bitcoins are lost or stolen.In its S–1 filing, the Winklevoss explained that: The Trust will not insure its bitcoin.… Therefore, Shareholders cannot be assured that the Custodian will maintain adequate insurance or any insurance with respect to the bitcoin held by the Custodian on behalf of the Trust.Furthermore, Shareholders’ recourse against the Trust, Custodian and Sponsor under [New York] law governing their custody operations is limited.… Consequently, a loss may be suffered with respect to the Trust’s bitcoin which is not covered by insurance and for which no person is liable in damages.

In a recent filing with the SEC, the fund’s Bats Exchange explained that: The Custodian has evaluated different insurance policy options and determined not to obtain coverage at this time due to insurers’ lack of understanding and sophistication with respect to Digital Assets, which has led to a thin marketplace of policies that are (i) not priced in an actuarially-fair manner and (ii) don’t properly model relevant loss vectors.Unfortunately, an efficient and effective marketplace for bitcoin insurance has not yet developed.Despite all that, in its S–1 filing today, SolidX reports that it has secured insurance for its bitcoin holdings: The Trust will maintain crime, excess crime and excess vault risk insurance coverage underwritten by various insurance carriers.The purpose of the insurance is to protect shareholders against loss or theft of the Trust’s bitcoin.The insurance will cover loss of bitcoin by, among other things, theft, destruction, bitcoin in transit, computer fraud (i.e., hacking attack) and other loss of the private keys that are necessary to access the bitcoin held by the Trust.

That’s quite a stark contrast.Coin Center has previously worked with Lloyds of London to help it and its insurance market participants understand the challenges and risks of securing bitcoins.You can read our report for Lloyd’s here.Link / Tweet Recently a small conference called “Token Summit” brought together the growing community of developers that are interested in the red hot area of tokenized crowdfunding.Through the new mechanism, millions of dollars are pouring into projects from the excited cryptocurrency community.This promising new model could hold the key to funding public goods such as open blockchain networks, but raises significant regulatory questions that must be answered first.On the first day of the conference, Coin Center’s Peter Van Valkenburgh led a panel entitled, “Is Grey the New Normal in Legal & Compliance?” that called attention to the regulatory concerns for this fundraising model.The panel of legal experts shared their views on how regulators might evaluate a token sale project and laid out some of different approaches to designing and implementing a sale in a way that properly navigates those concerns Read more: Could your decentralized token project run afoul of securities laws?

The Bank Secrecy Act, Cryptocurrencies, and New Tokens: What is Known and What Remains Ambiguous You can watch the full panel below: Link / Tweet National Public Radio’s Morning Edition stopped by the Coin Center offices to admire our “hipster vibes” and update their listeners on the status of Bitcoin.The short segment covers basics like why Bitcoin works like cash for the internet and why that’s important.We even took a trip to a nearby Bitcoin ATM, which worked flawlessly.Listen to the whole segment here: Link / Tweet The weekly briefing from Coin Center.Everything you need to know about cryptocurrency and public policy in one entertaining read.In an editorial for Fortune, Coin Center executive director Jerry Brito lays out three things that the government can do to reduce regulatory friction on the growing open blockchain network ecosystem: First, some Bitcoin businesses fall under the definition of money transmitters and rightly need to get money transmission licenses, which are handled by the states.

The problem is that there are 47 different state money transmission licensing regimes and they all have their own rules.It’s a nightmare for a digital currency companies to navigate, with compliance costs easily reaching into the millions of dollars a year.If a federal alternative, like the Office of the Comptroller of the Currency’s proposed special purpose fintech charter, were adopted, then Bitcoin businesses would have a more streamlined alternative.Another issue with money transmission licensing is that it shouldn’t apply to every application of Bitcoin.Some types of Bitcoin businesses never take custody of a customer’s funds, which means they can’t run away with or lose them.Those businesses should not need licenses.To protect those companies, Congress could create a federal safe harbor for non-custodial digital currency companies.Finally, Bitcoin taxation is broken.Since it’s not technically a foreign currency, it is treated as property by the Internal Revenue Service (IRS) for tax purposes.

This means a user needs to calculate capital gains tax every time they buy a cup of coffee.That’s pretty difficult to manage.If the IRS amended the tax code to treat online currencies like foreign currencies, they would become much easier to use day to day.These are the type of sensible policy proposals that we advocate for.During a congressional testimony last week, Coin Center director of research Peter Van Valkenburgh directly called on Congress to enact these solutions to the problems with money transmission licensing.He explained why, if left unaddressed, the inhospitable climate in the United States would likely drive drive financial innovation overseas to jurisdictions with more easily navigable regulatory regimes."/7qON1ysb5z — Coin Center (@coincenter) June 9, 2017 Link / Tweet Coin Center, in collaboration with Digital Currency Group and the Illinois Blockchain Initiative, hosted an event in Chicago this week to help interested banks become more familiar with the technology and what they can do to support it.

Digital currencies companies have a hard time establishing banking relationships with traditional financial institutions.Rather than risk navigating the complex regulatory considerations around the technology, many banks have chosen to avoid servicing the industry altogether.This makes it that much harder for startups to operate, even putting aside regulatory burdens.During the daylong event, Coin Center executive director Jerry Brito presented the conclusions of our report on banking, laying out the obstacles that digital currency companies face when attempting to get banked, what banks perceive as the risks, and how they can be overcome.The banks also had an opportunity to voice their concerns and offer suggestions for measures that companies could take to help potential banking partners feel more comfortable with digital currency business models.Following the bank briefing, Coin Center and Digital Currency Group headed over to Chicago’s Bitcoin & Open Blockchain Community meetup to share their views on regulation and the ecosystem, respectively, and take questions from the audience.

The packed event was a great time for all.If you are interested in hosting Coin Center at your local meetup, be sure to reach out.Fantastic @BOBmeetupCHI tonight w/presenters @jerrybrito & @Melt_Dem.Such a thrill to meet them in person!/l2z2EZiAxl — UASFMom (@bitcoinmom) June 6, 2017 Link / Tweet In a letter sent today to IRS Commissioner John Koskinen, Reps.Jared Polis and David Schweikert asked the IRS to take action on recommendations the Treasury Inspector General for Tax Administration made last year, which dinged the IRS for not providing sufficient clarity to tax payers and digital currency exchange.We encourage the IRS to consider the recommendations of the TIGTA and take action based on those recommendations to increase taxpayer compliance with Notice 2014–21.Further, we encourage the IRS to engage with virtual currency exchanges to better understand their ability to engage in information reporting, including recordkeeping to track realized gain or loss and identify the amounts of virtual currency used in taxable transactions.

Had the IRS made tax reporting clearer and simpler, as the letter suggests it consider, perhaps they would not have felt the need to issue its incredibly overbroad John Doe Summons of a million digital currency users.Polis and Schweikert for taking leadership on this issue, and we look forward to working with them on other important tax issues, like creating a de minimis exemption for digital currencies.Link / Tweet Government interest in digital currencies and open blockchain networks such as Bitcoin continues to mount, as evidenced by the unusual circumstance that two different Congressional committees are holding hearings about the technology at exactly the same time.Coin Center will be testifying in both hearings and they will be live streamed.First will be a hearing entitled “Virtual Currency: Financial Innovation and National Security Implications” in the Terrorism and Illicit Finance Subcommittee of the House Financial Services Committee.This follows a full-member briefing Coin Center put on last week on the topic, and our executive director Jerry Brito will be testifying.

It starts at 10 a.m.You’ll be able to watch at this link.The second is a hearing entitled “Improving Consumer’s Financial Options With FinTech” in the Digital Commerce and Consumer Protection subcommittee of the House Energy and Commerce Committee and Coin Center research director Peter Van Valkenburgh will be testifying.It will start at 10 a.m.as well and his testimony is to be focused on the barriers to innovation that cumbersome state regulation presents.Not only are concurrent hearings on the same topic not typical, but it’s also unusual to have two persons from the same organization invited to testify at the same time by two separate committees.It’s a testament to Coin Center’s hard work over the past few years laying a foundation of credibility on Capitol Hill.Link / Tweet The Chicago Bitcoin & Open Blockchain Community meetup has invited Coin Center’s Jerry Brito to give an overview of the regulatory challenges facing these technologies, what we are doing to address them, and what you can do to help.