Dalia Blass of the Ropes & Gray law firm has been tapped

to head the SEC’s Division of Investment Management which regulates, and approves or disapproves, exchange traded funds (ETFs). Blass’ firm, Ropes & Gray, represents the Winklevoss twins in their efforts to create a Bitcoin ETF.

The SEC famously rejected two Bitcoin ETF proposals earlier this year, citing largely unregulated markets. They did leave themselves an out, however. The Commission indicated that in the event that a regulated futures market for Bitcoin were developed, they might reconsider. Not long ago, the Commodity Futures Trading Commission (CFTC) gave LedgerX permission to create such a futures market. The SEC agreed to hear an appeal from the Winklevoss twins earlier this year, but few watchers expected the twins to receive a different answer. With Blass at the helm and regulated futures markets being developed, however, this could change.

What is an ETF?

An “exchange traded fund” sounds like something arcane that would only be of interest to high-flying Wall Street types, but it’s actually relatively simple. An ETF tracks the value of an underlying asset or class of assets and is required to buy and sell the underlying asset as shares of the ETF are bought and sold. ETFs are a convenient way to expose oneself to certain assets that may be difficult to own. For instance, most people don’t have a huge tank in the backyard to store oil or natural gas. If somebody wants to invest in oil and gas but doesn’t want to own and store the actual commodity itself, they can purchase shares of an oil and gas ETF.

Entirely new class of Bitcoin investors

A Bitcoin ETF could open Bitcoin investing to an entirely new class: institutional investors. It is currently difficult for institutions to invest in Bitcoin. Various mutual funds, hedge funds and pension funds have specific rules about the types of assets they are allowed to own. Institutions are typically allowed to own ETFs, but may not be allowed to own the underlying asset. Bitcoin is difficult to store, requiring both absolute security and adequate backups. Many interested investors are either unwilling or unable to buy and store Bitcoin, but would like exposure to the asset itself. An ETF is quite useful for this purpose.

It’s also extremely challenging to hold actual Bitcoin in tax-advantaged accounts such as IRAs. A Bitcoin ETF would make that much easier since ETFs can be bought and sold just like regular stocks. At the present time, the only way (for most people) to gain exposure to Bitcoin in a tax-advantaged account is to buy shares of the Bitcoin Investment Trust, listed as GBTC. However, because of high demand and limited supply, GBTC shares trade at a huge premium. Until this morning, the premium was a little over 100 percent. Each GBTC share is “backed” by about 0.09 Bitcoin, yet the shares trade at prices far more than the underlying Bitcoin value. Indeed, following the news about Blass and a critical article by investor Andrew Left caused shares of GBTC to tumble by 25 percent.

Sitcom Silicon Valley’s Pied Piper is Now Real Thing Thanks to Blockchain

HBO’s popular sitcom, based on a startup trying to make it big

in Silicon Valley, under the same name, has seen its made-up product become a reality with the power of Blockchain technology and cryptocurrencies. Pied Piper, which has a phony website that looks a lot better than some real companies, is supposedly a compression technology that, in the real world, does not exist, or until recently had no scope for being a reality. Now, the boom in Blockchain technology and the expansion of its uses has seen the idea of Pied Piper become a reality.

What is Pied Piper?

In the series, Pied Piper is a compression software company that stores your data across a network of devices, giving you instant access to your data even though that data is not physically stored on the device you’re using. In essence, space is saved because the data is spread across a larger network of devices, yet the same data is secured privately with access only granted to the user with the correct access to it. While that sounded pretty far fetched and unattainable in 2014 when the show started, the boom of cryptocurrencies and its associated Blockchain technology has now seen a number of companies following that very business model.

A real world Pied Piper

There are actually a few companies who can claim the title of being the ‘real world Pied Piper’ for example, Storj – a decentralized cloud storage network, as well as Sia – a similar cloud storage based on the Blockchain. Essentially, by utilizing the Blockchain, as a global network of computers that is recording transactions, or even pieces of information on a public ledger, data can be stored on the Blockchain. The information is thus split, encrypted and distributed on the Blockchain across a network of decentralized computers. The data is kept safe thanks to private encryption keys but is still readily available and easily accessible.

Blockchain bringing science fiction into reality

Blockchain technology has been doing a lot of this recently, solving seemingly unsolvable technology problems, while at the same time disrupting traditional models of business and society. As still a relatively new technology and one that has only recently been explored on a mass scale, Blockchain technology seems to keep providing answers, even going into space.

Chuck Reynolds

Marketing Dept
Contributor
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