Should Fidelity’s Bitcoin ETF Trade at a Discount or Premium?
644 sats \ 14 comments \ @kr 19 Mar bitcoin
I believe Fidelity is one of the only major ETF issuers that isn’t using Coinbase to custody their funds.
Right now the market is saying “who cares?” as Fidelity’s ETF still trades for the pro-rated portion of BTC it holds, but I can also see two different arguments one might make.
On the one hand, if Coinbase became a target or was compromised, Fidelity’s ETF holdings would be fine.
On the other hand, if Fidelity doesn’t have a deep understanding of how to custody Bitcoin, they could expose themselves to unique risks.
So my question to stackers is the following: should Fidelity’s Bitcoin ETF trade at a discount or a premium to other Bitcoin ETFs?
Discount16.7%
Par41.7%
Premium29.2%
I have no idea12.5%
24 votes \ poll ended
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139 sats \ 0 replies \ @grayruby 19 Mar
One of the other etfs is using Gemini. Maybe HODL.
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72 sats \ 2 replies \ @kepford 19 Mar
I'm not all that knowledgeable about tradfi. I mean, I'm probably more knowledgeable than the average Joe but my guess is that most on SN are as well. That said, lets say that Fidelity did screw up their custody in house and lost at least some of their fund holders bitcoin. Would they not be liable to their customers legally to make them whole? I don't know the answer to this question but I suspect the answer is yes.
Same question goes for Coinbase. If they screw up and lose one of the other funds bitcoin what is their legal responsibility.
And yes, bitcoin fixes this none of this protects against the U.S. government seizing the bitcoin just like they could take over any corporation based in the U.S. These are all risks. But given a future where the U.S. enforces contract law I wonder how that would go down.
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33 sats \ 1 reply \ @kr OP 19 Mar
well in the case of Coinbase, they custody $193 billion of digital assets for clients, which is more than the entire value of their business.
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90 sats \ 0 replies \ @kepford 19 Mar
I should have mentioned that. I'm not saying they could make people whole but rather they would be on the hook to do so. This is a HUGE risk for anyone letting anyone custody their bitcoin.
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69 sats \ 2 replies \ @Undisciplined 19 Mar
I really don't have much reason for choosing premium, beyond thinking that if Fidelity took this alternate path, they likely had someone in-house who knew about custody options.
That said, I fully expect one of these new major Bitcoin holders to catastrophically mishandle their stack. Maybe it will be Fidelity.
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43 sats \ 1 reply \ @kr OP 19 Mar
when you say “fully expect”, what kind of odds are you predicting?
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62 sats \ 0 replies \ @Undisciplined 19 Mar
I don't know. I just expect that to be something we see, so I guess that means better than 50-50. It fits with my hypothesis that we live on the dumbest timeline.
It also doesn't need to be one of the current parties. Maybe some late comer will swoop in without knowing what they're doing.
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62 sats \ 0 replies \ @Wumbo 19 Mar
If they are the only ETF with a different custodian arrangement then it is premium.
If a couple other ETFs come along and diversify away from Coinbase then I would expect it to be at par.
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54 sats \ 0 replies \ @DarthCoin 19 Mar
crap, you are talking about crap, not about bitcoin.
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0 sats \ 0 replies \ @hueso 20 Mar
IDGAF
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0 sats \ 0 replies \ @WeAreAllSatoshi 20 Mar
This might be the most evenly distributed poll results I’ve seen here!
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0 sats \ 0 replies \ @joelaw 20 Mar
Premium - counter-party risk reduced.
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0 sats \ 0 replies \ @BitcoinIsTheFuture 19 Mar
Par for the course. Love the self hosted nature, but prefer it in cold storage when you can!
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0 sats \ 0 replies \ @0xbitcoiner 19 Mar
I don't think there's any reason for it to be traded at a premium or discount because both are doing the best of the state of the art.
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