The Winklevoss Bitcoin Trust has yet to come to market, but just over a year after twin brothers Cameron and Tyler Winklevoss filed plans with the Securities and Exchange Commission for the trust, there is debate regarding how it should be classified.
Specifically, some market participants are pondering whether the Winkelvoss Bitcoin Trust will be classified as a currency ETF along the same lines of a PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP) or a commodity fund comparable to the SPDR Gold Shares (NYSEArca: GLD).
Either way, the Winklevoss Bitcoin Trust promises to be unique, if not ground-breaking.
“This may be the first time that an asset first comes to market in the form of an ETF. This is a new exposure offered to the broad investor base. In the past, any new asset that has come to the market has been in the form of another product convention first,” said David LaValle, vice president of transaction services for NASDAQ OMX, in a statement.
In May, a regulatory filing revealed the Winklevoss Bitcoin Trust will trade on the Nasdaq. Last week, an updated filing showed the ETF will trade on the Nasdaq under the ticker “COIN.” [Ticker Announced for Bitcoin ETF]
LaValle says that making bitcoin, a decentralized digital currency based on a peer-to-peer network and can be exchanged through computers internationally without a financial intermediary, accessible via the ETF wrapper can help give it added credibility. However, questions remain for regulators.
“Putting bitcoin in an ETF wrapper is pushing the envelope for regulators to figure out if it will be a currency or commodity in the context of an investable product. The recent IRS ruling classified Bitcoin as real property similar to a commodity,” added LaValle.
COIN is, slowly, advancing toward debut as the first ETF offering exposure to a virtual asset. Although the process has been slow, there a signs COIN will eventually become a reality. As Eric Balchunas writes for Bloomberg, positive signals include the updated filing with the COIN ticker and the February creation of the Winkdex, which will be used to price the value of assets held by the trust.
“The twins’ choice of lawyer, Kathleen Moriarty, works in COIN’s favor. She’s helped just about every issuer from iShares to WisdomTree bring new and different ETFs to market. She worked with the SEC and drafted the prospectus to get the SPDR S&P 500 Trust (NYSEArca: SPY) launched in the early ‘90s,” writes Balchunas.
Winkdex Quote
Tom Lydon’s clients own shares of GLD and SPY.