Mobile Payments Advance as Bitcoin’s First-Ever ETF Rolls Out

September 4, 2019         By: Steven Anderson

Somewhere, the Winklevoss twins are seething.

Easily one of the biggest issues in cryptocurrency—and by extension in mobile payments—has been the establishing of an exchange-traded fund (ETF) for bitcoin. Several have tried—including those aforementioned Winklevosses—to get an ETF in play for cryptocurrency, especially bitcoin, for years. Recently, however, one finally managed to make it through the gauntlet that is the Securities and Exchange Commission (SEC), but not without some caveats.

The victors were SolidX Management and Van Eck Securities Corp., who are planning to sell their shares in an ETF thanks to SEC Rule 144a. Those who keep track of SEC rules are already inwardly groaning, as this is the rule that allows for “private placements of securities” with “qualified institutional buyers.” The SEC’s rules specifically exempt “qualified institutional buyers” from such sales, which allows an ETF to go forward.

For those wondering what it takes to be considered a “qualified institutional buyer,” and thus be allowed to purchase shares of the bitcoin ETF, it’s like the old saying goes: if you have to ask, you can’t afford it. “Qualified institutional buyers” have several criteria available to meet, one of which is that you own and invest in at least $10 million of securities from issuers that aren’t affiliated with the buyer. While Van Eck and SolidX hope to use this as proof a regular ETF can work, the regular investor is out in the cold for now.

This is another slap in the face to the regular retail investor. Let them prattle on all they please about “financial sophistication”; a truly free market economy would allow investors to invest, no matter what their bottom line is. The regular investor should be insulted this category even exists; to suggest that any one investor is of a better class than another simply because of his bottom line is a fundamental disagreement with one of the United States’ own founding principles: all men are created equal. It only makes it more insulting that most of the trades cloistered in 144a turn out to be the most lucrative there are.