From: [name redacted]
Sent: October 13, 2016
Subject: File Number SR-BatsBZX-2016-30


My name is [redacted], I am a 29 year old optometrist from California who invests most of my earnings each month in hopes of becoming financially independent one day.  One of my favorite investments is Digital Currency, in particular bitcoin, because it has unique characteristics that make it durable, easy to transfer, and deflationary.  Almost like digital gold.

I recently applied for a home loan and I was denied the loan because my source of downpayment was money being transferred out of my investment in bitcoin.  I had to scramble to barrow money from family because the bank found bitcoin to be an unusual source of investment.

An ETF for bitcoin would greatly benefit young investors like me who wish to invest safely and securely in new technology.

I will now answer the questions you wish to be addressed.  My answers are in bold:

1.   The proposed fund, if approved, would be the first exchange-traded product available on U.S. markets to hold a digital asset such as bitcoins, which have neither a physical form (unlike commodities) nor an issuer that is currently registered with any regulatory body (unlike securities, futures, or derivatives), and whose fundamental properties and ownership can, by coordination among a majority of its network processing power, be changed (unlike any of the above). Moreover, as the Exchange acknowledges in its proposal, less than three years ago, the bitcoin exchange then responsible for nearly three-quarters of worldwide bitcoin trading lost a substantial amount of its bitcoin holdings through computer hacking or fraud and failed.57 What are commenters’ views about the current stability, resilience, fairness, and efficiency of the markets on which bitcoina are traded? What are commenters’ views on whether an asset with the novel and unique properties of a bitcoin is an appropriate underlying asset for a product that will be traded on a national securities exchange? What are commenters’ views on the risk of loss via 56 57 See supra note 3. See Notice, supra note 3, at 25 n.19. 12 computer hacking posed by such an asset? What are commenters’ views on whether an ETP based on such an asset would be susceptible to manipulation?

Thievery is always a concern, including for Gold ETFs.  Gemini is a US security based exchange and can be trusted.  Foreign exchanges that were jerry rigged for trading bitcoin and had minimum security is akin to holding gold in a dufflebag and strolling down a dark alley: dangerous.  Dangerous exchanges exist and will always exist, but Gemini is not.

Coordination among a majority of network processing power can have an effect on bitcoin, which inevitably leads to changes in the bitcoin value, and can directly affect specific wallet holders.  Coordination among a majority of those with great money or power can affect any market, including gold or other assets.  Risk is inherent in every investment.

2.   According to the Exchange, the Gemini Exchange Spot Price is representative of the accurate price of a bitcoin because of the positive price-discovery attributes of the Gemini Exchange marketplace. What are commenters’ views on the manner in which the Trust proposes to value its holdings?

I think the trust has an excellent methodology of representing the accurate price of bitcoin.

3.   According to the Exchange, the Gemini Exchange is a Digital Asset exchange owned and operated by the Custodian and is an affiliate of the Sponsor. What are commenters’ views regarding whether any potential conflict of interest or other issue might arise due to the relationship between entities such as the Sponsor, the Custodian, and the Gemini Exchange?

I do not have the expertise to understand this question.

4.   According to several commenters, there is a need for the Exchange to provide additional information regarding “proof of control” auditing, multisig protocols, and insurance with respect to the bitcoins held in custody on behalf of the Trust, in the interest of adequate security and investor confidence in bitcoin control. What are commenters’ views on these recommendations regarding additional security, control, and insurance measures?

There is not a need for additional information regarding “proof of control” at this time.

5.   A commenter notes that the Gemini Exchange has relatively low liquidity and trading volume in bitcoins and that there is a significant risk that the nominal ETP share price “will be manipulated, by relatively small trades that manipulate the bitcoin price at that exchange.”58 What are commenters’ views on the concerns expressed by this commenter? What are commenters’ views regarding the susceptibility of the price of the Shares to manipulation, considering that the NAV would be based on the spot price of a single bitcoin exchange? What 58 See Stolfi Letter, supra note 4. 13 are commenters’ views generally with respect to the liquidity and transparency of the bitcoin market, and thus the suitability of bitcoins as an underlying asset for an ETP?

Gemini exchange volume is in my opinion sufficient.  Manipulation is possible, which is true of other ETF’s.

6.   The Exchange asserts that the widespread availability of information regarding Bitcoin, the Trust, and the Shares, combined with the ability of Authorized Participants to create and redeem Baskets each Business Day, thereby utilizing the arbitrage mechanism, will be sufficient for market participants to value and trade the Shares in a manner that will not lead to significant deviations between intraday Best Bid/Best Ask and the Intraday Indicative Value or between the Best Bid/Best Ask and the NAV. In addition, the Exchange asserts that the numerous options for buying and selling bitcoins will both provide Authorized Participants with many options for hedging their positions and provide market participants generally with potential arbitrage opportunities, further strengthening the arbitrage mechanism as it relates to the Shares. What are commenters’ views regarding these statements? Do commenters’ agree or disagree with the assertion that Authorized Participants and other market makers will be able to make efficient and liquid markets in the Shares at prices generally in line with the NAV? What are commenters’ views on whether the relationship between the Gemini Exchange and the Trust’s Sponsor and Custodian might affect the arbitrage mechanism?

I agree with the assertation that the Authorized Participants and other market makers will be able to make efficient and liquid markets in the Shares at prices generally in line with the NAV.

Thank you,

[name redacted]

Sent fromMail for Windows 10