Bitcoin ETF may be rescued by ‘Spiderwoman’

Jose Castro – Fourth Estate Cooperative Contributor

New York, New York, United States (4E) – After their debacle on Facebook, the infamous Winklevoss twins are now latched on to an idea that may be saved by a woman deferentially known as ‘Spiderwoman’. Tyler and Cameron Winklevoss are now in the process of getting the approval of regulatory authorities for their proposed bitcoin exchange traded fund.

Assisting the twins is Kathleen Moriarty. She got the monicker ‘Spiderwoman’ for her work on the approval of State Street Corp’s ‘Spider’ ETF when it was made available to the market back in 1993. Now, she is the lawyer in charge of getting the Bitcoin ETF approved by the US Securities and Exchange Commission.

The idea has been widely discussed, even denounced in some quarters. The idea for this ETF is novel, as it is attached to a virtual asset. Initially, Moriarty’s firm conducted its due diligence, which took all of four weeks to determine that the asset is not a Ponzi scheme. According to the executive committee of Katten Muchin Rosenman LLP, where Moriarty is a senior partner, Bitcoin was “not an inherently fraudulent scheme.” This stamp of approval is what the 20 year expert on ETF’s has been working on ever since.

Moriarty is working on having the Winklevoss Bitcoin Trust. Crafted in 2013, this was supposed to be the first Bitcoin ETF application made with the SEC. Pending the approval of the ETF, the Bitcoin Investment Trust had unveiled plans to offer to the market an over the counter Bitcoin ETF. This second option, aside from the one being worked on by the Spiderwoman, would not require SEC approval. Launch date has been set in the last quarter of 2014.

In essence, a Bitcoin ETF would allow investors to trade on an exchange using different investment strategies. These include shorting the ETF and purchasing on the margin. Brokerages would also be allowed to buy and sell options on the asset. The establishment of the Bitcoin ETF would provide exposure of the asset to the mainstream investment market, validating it as a storage of value and as a mean of currency.

The proposed ETF would utilize the Winklevoss Index or Winkdex. This index would peg the value of the Bitcoin working as a price index. According to windex.com, “The index is “calculated by blending the trading prices in U.S. dollars for the top three (by volume) qualified Bitcoin Exchanges during the previous two-hour period using a volume-weighted exponential moving average. This proprietary formula weighs transactions proportionally by volume as well as exponentially by time to give greater weight both to the higher volume transactions and more recent transactions.”

The main criticism though is that the ETF would provide no value if the item can only be purchased using a third party over and above the fees associated with ETF transactions. While many third party service providers require a one-time fee to use their platform, the Bitcoin ETF would enable investors to utilize different strategies across man platforms, many of which are not available in the US.

And at the forefront is Spiderwoman.

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