Having allegedly gained approval from FINRA, Barry Silbert's Bitcoin Investment Trust will soon be available to trade via OTC Markets. Silbert's BIT, which has been allocated the ticker code of BTCV, has been classified by OTC Markets as "OTC Pink No Information". OTC Markets, previously known as Pink Sheets, provides a description of the type of companies one might find in the OTC Pink No Information category:
Indicates companies that are not able or willing to provide disclosure to the public markets – either to a regulator, an exchange or OTC Markets Group. Companies in this category do not make Current Information available via OTC Markets Group's News Service, or if they do, the available information is older than six months. This category includes defunct companies that have ceased operations as well as 'dark' companies with questionable management and market disclosure practices. Publicly traded companies that are not willing to provide information to investors should be treated with suspicion and their securities should be considered highly risky.
BIT's listing on OTC Markets differs to that of the Winklevoss Trust in that the Winklevii still await approval by the SEC for their ETF. Silbert's BIT avoided the need for SEC approval by locking down the ability of BIT's private investors to liquidate their position for a total of 12 months. Having completed the 12 month lock up period, shares in BIT can then be sold to the unqualified investors who are known to invest in all manner of schemes found on the pink sheets.
On the contrary, the BIT has taken a much more intelligent approach to listing a bitcoin ETF. Of course, the premise is flawed from the beginning in that there is NO NEED to invest in a contract backed by a third party's promise to hold bitcoin. Obviously. But, your comparative analysis that Silbert's legal strategy is somehow scammier than the Winklevi… no. The BIT clearly has better lawyers, and they have thought this through. This back-door approach to the public markets is smart, and in any event I am certain that an OTC Pink Sheets listing is not the end game for Silbert.
It wasn't my intention to imply that the Winklevoss Trust is any more legitimate that Silbert's BIT simply because one seeks SEC approval while the other bypasses the SEC entirely, but I can see how you got there.
You're right, I was reading into your article, but you did not say what I said you said.
Anyway, obtaining a pink sheet listing (which is really just a price quotation service) is an Exchange Act backdoor, not a Securities Act backdoor. That is, until the BIT goes through the SEC, its units can only be traded pursuant to an exemption, as I understand it. I would guess — though I'm far from an expert on these more advanced securities issues — that the BIT is still only changing hands in Rule 144 exempt sales.
btw- who is this? do you have a twitter?
Someone should naively ask them if this will be convertible to/from actual bitcoin. Just to take photo of their bemused faces.
I wonder what the point of a bitcoin ETF is. From the buyer's perspective, I suppose it is a way to park dollar-denominated funds locked within tax-privileged retirement accounts in a bitcoin-related asset (one that is much riskier than actual bitcoin, mind you). From the promoter's perspective, what is the point? No sane person wants to take short exposure in bitcoin. I have no inside info on either Silbert or the Winklevi. My armchair conjecture is that Silbert wants to make a market, and extract transaction fees. Whereas the Winklevi want a vehicle where they can cash out of their bitcoin holdings by selling them to the public at the highest possible valuation. Both strategies are pointless, and inferior to just buying and holding. I mean, if these guys put all the money they spent on securities law advice into buying bitcoin, that would probably be a better investment in the long run. And at least they wouldn't be running the risk of a catastrophic loss.
Bitcoin derivatives.
What could possibly go wrong?
;)