July 12, 2018
Dear Sir or Madam:
It is clear that the investing public strongly desires more investment exposure to the technology known as "Bitcoin". As of the date of this comment, the "market cap" for every coin on the protocol is over One Hundred Billion Dollars.
And yet, the retail options for investment are severely limited, and unjustifiably so. The only retail investment option is (OTC: GBTC), which trades at anywhere from 1.5x to 3x the actual Net Asset Value to the underlying coins -- yet another indication that the investment options for Bitcoin are artificially and unnecessarily limited.
The other, non-retail investment option is to physically purchase the coins themselves. However, this happens through unregulated exchanges that may or may not be hacked, may or may not be solvent, and may or may not be able to accept and receive funds from an investor's bank. And to the extent that an investor wants to physically hold the coins themselves, they need technical expertise and risk losing their entire investment through something as simple as a lost "private key" or a misplaced thumb-drive.
Furthermore, these unregulated, exchange-driven purchases have created another quagmire for both investors and regulators alike: taxes. Most exchanges do not report gains and losses to the IRS OR the account holders. This leads to confusion and administrative burden for the scrupulous, and facilitates tax fraud for the unscrupulous.
Allowing a Bitcoin ETF to be offered to retail investors would help alleviate most, if not all, of these issues.
True, any Bitcoin ETF comes with risk of loss by the custodian trustee holding the coins. However, (1) this risk is minuscule compared to forcing the technologically-unsophisticated investor to store the coins on their own, and (2) *all* investment funds and trusts are subject to the risk of theft and fraud, and an ETF based on a trustee holding underlying Bitcoins would not be materially different.