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. 22. 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 $1,255.53 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.
Long-Term Edge?
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.
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.
