Winklevoss ETF Offering Increased in Dollars But Not in Bitcoin
Winklevoss Bitcoin Trust, sponsored by Digital Asset Services, LLC, filed Amendment 9 to their S-1 form with the U.S. Securities and Exchange Commission (SEC) on February 8, 2017, revising several details of the registration statement including the number of shares to be registered, the maximum offering price per share, and risk factors for investors.
The previous amendment was submitted December 7, 2016. By adjusting the amount of shares from one million to 10 million, and lowering the maximum price per share from $65 to $10, the new amendment has restructured the Trust’s assets to be presented as smaller pieces. Additionally, the complete offering has seemed to increase from $65 million to $100 million.
It is important to understand that these figures, displayed in U.S. dollars on the SEC form are only estimates based on the current price of bitcoin and were submitted in U.S. dollars for the purpose of calculating the registration fee, just because the SEC does not allow for figures to be presented in bitcoin.
More accurately, the Winklevoss brothers have revised the cost of each share from 0.1 BTC to 0.01 BTC, and the size of the offering has only seemed to increase from $65 million to $100 million because the price of one bitcoin has grown since the last filing. Bitcoin value is now being estimated to be worth $1,000 for purposes of filing the SEC form, compared with a $650 price per bitcoin estimate at the time of the previous amendment filing.
The offering, if calculated in bitcoin, has remained the same as the offering announced in the previous amendment filed in December 2016. It is still ten baskets of shares, with each basket containing 10,000 BTC.
From Amendment 8, filed in December 2016:
“Each Share comprising the initial Baskets of Shares (the “Seed Baskets”) represents [0.10] bitcoin and is offered at a per Share price equal to the price of [0.10] bitcoin. The price of bitcoin is based on the 4:00 p.m. Eastern Time Gemini Exchange Auction Price (as defined herein). On [ ], 2016, this price was $[ ], and the price of each Share was $[ ]. The Seed Baskets consist of [100,000] Shares worth [10,000] bitcoin.”
From latest amendment, Amendment 9:
“Each Share comprising the initial Baskets of Shares (the “Seed Baskets”) represents [0.01] bitcoin and is offered at a per Share price equal to the price of [0.01] bitcoin. The price of bitcoin is based on the 4:00 p.m. Eastern Time Gemini Exchange Auction Price (as defined herein). On [ ], 2017, this price was $[ ], and the price of each Share was $[ ]. The Seed Baskets consist of [1,000,000] Shares worth [10,000] bitcoin.”
In addition to these changes, the list of risk factors has been adjusted to include a wider coverage. Newly added potential hazards to the investor include:
- “The reputation regarding the use of bitcoin for illicit purposes.”
- “Currency needs by miners and taxpayers who may liquidate bitcoin holdings to meet tax obligations.”
- “Investors’ expectations with respect to bitcoin’s rate of deflation.”
- “Interruptions or failures at other Bitcoin Exchanges.”
- “Theft, or news of such theft, of bitcoin from individuals or bitcoin retail and service providers, including companies that buy, sell, process payments or store bitcoin.”
- “The availability of companies providing bitcoin-related services.”
- “Increased competition from other forms of Digital Assets or means of payments.”
- “Fees, including miners’ fees, associated with processing bitcoin transactions.”
The proposed Winklevoss ETF, if approved, would trade on Bats BZX Exchange, Inc. under the symbol “COIN.” There has been a lot of speculation in the press recently about whether this Commodity ETF really has a chance to get approved by the SEC. The bitcoin instrument was initially filed in 2013, and its approval or disapproval has been delayed repetitively for years.
However, March 11, 2017, is the final deadline for a decision by the SEC, and traders, investors, and interested parties are following this event closely because of the impact it could have on the fiat value of bitcoin, where Needham & Co. reckon this impact is ‘underappreciated within the industry.’