WSJ article on the ETF decision by SEC

For those without access:

Bitcoin may soon be coming to an exchange-traded fund nearer to you.

For Wall Street, the eight-year-old cryptocurrency is still a small asset class, but one that could boom in the future. An ETF could serve as a bridge from bitcoin’s current status as a counterculture technology to mainstream acceptance.

Enthusiasm about a bitcoin-based ETF helped drive the currency to a new record near $1,300 last week. The Securities and Exchange Commission is due to decide this week whether to give a green light to a new ETF that would give investors easier access to the digital currency.

Of course, the regulatory body may decide that the idea needs more work before letting in the masses. ETFs have been hugely popular over the past decade and often can channel billions of dollars into an asset class. The low-cost vehicles are accessible like standard mutual funds, but can be bought and sold throughout the day like an individual stock.

Bitcoin on the other hand is a digital currency not backed by any sovereign government, created by programmers looking for an alternative to dollars, yen and euro. It exists on a global network of computers designed to replace expensive middlemen such as banks.

For all its potential, bitcoin remains very much a work-in-progress. Its trading has been marred by volatile moves and losses triggered by hackers.

Trying to convince the SEC to let bitcoin spread to more investors are Cameron and Tyler Winklevoss, the twins who became well-known for their role in the early days of Facebook Inc. For more than three years now, the brothers have been investing in and building products for the virtual currency. Working from a loft in Manhattan’s Chelsea neighborhood, they have opened an online bitcoin exchange and a related investment business.

Their Winklevoss Bitcoin Trust would be the capstone of their plans. Under the SEC’s application rules, a decision is expected on the trust by Saturday. The commission could approve it, reject it outright, or leave a window open for a rejiggered application. A spokesman for the agency declined to comment.

Meanwhile, technology entrepreneur Barry Silbert is working on his own bitcoin efforts a few blocks away from the Winklevoss twins. Digital Currency Group, which Mr. Silbert runs, already maintains a quasi-public bitcoin ETF available to accredited investors, which trades on the so-called pink sheets. The firm is applying to list the ETF on the New York Stock Exchange as fully public ETF.

By listing on the NYSE, Grayscale would have it operate as a traditional ETF, meaning that specialized traders would create and retire shares based on demand. These traders, called authorized participants, are pivotal players in the ETF market and keep ETF prices aligned with the value of the assets they track.

The Winklevoss twins have applied to list their ETF on the Bats exchange under the symbol COIN. The pair, who were U.S. Olympic rowers in the 2008 games in Beijing, are best known for their fight with Mark Zuckerberg over the creation of Facebook more than a decade ago.

The three were classmates at Harvard in 2003 when the twins approached Mr. Zuckerberg to help with their website, called ConnectU. Early in 2004, Mr. Zuckerberg formed Facebook and parted ways with the twins, sparking a battle over ownership rights. The settlement of that suit resulted in a payment of at least $65 million to the Winklevoss twins. In 2012, they started a venture-capital firm, Winklevoss Capital, and soon after that, they started getting interested in bitcoin. A Facebook representative couldn’t be reached for comment.

Bitcoin’s fans often promote it as a new version of gold, and if these ETFs follow the path gold ETFs took, it could spell an advantage to whichever firm gets to market first.

The SPDR Gold Shares ETF launched Nov. 18, 2004, has $31 billion in assets. The iShares Gold Trust ETF launched soon after, on Jan. 21, 2005, but has just $7.7 billion in assets.

Nobody expects any of these bitcoin ETFs to have assets in the billions. A January report by Needham analyst Spencer Bogart projected a bitcoin ETF could see $300 million in its first week. Mr. Bogart also figured, however, the odds of any of these ETFs getting approved by the SEC were less than 25%.

The Winklevoss twins and Mr. Silbert aren’t the only ones chasing a bitcoin ETF. Another Manhattan-based firm, SolidX, is also planning its bitcoin ETF and has an application in with the SEC, with a deadline of March 30. Grayscale filed its application in January; a final deadline hasn’t been set for it.

Either way, the decision will almost certainly affect the price of bitcoin no matter what it is. Given bitcoin’s historic volatility, and given the highly speculative nature of its trading, the reaction could be significant, analyst say.

I find it very difficult to take anything from WSJ seriously after what happened to PewDiePie.