How To Invest In Bitcoin & Marijuana ETFs
What do bitcoin and marijuana have in common? You might be able to think of more than one answer to that question, but here's the most salient for investors: Neither is available in an ETF wrapper in the United States.
That's not too surprising. Bitcoin has only recently entered mainstream consciousness and has a reputation for being a volatile, unregulated asset. Meanwhile, marijuana, while gaining acceptance in some states, is still illegal to possess, according to federal law in the United States.
In that context, it's not a shock that there's no bitcoin or marijuana exchange-traded products listed on U.S. exchanges―at least not yet―though it's not for want of trying.
SEC’s High Hurdle
Three bitcoin ETFs that have attempted to come to market, the most famous of which is the Winklevoss Bitcoin ETF, which has so far been dismissed by the Securities and Exchange Commission. There's also a marijuana ETF in registration, the Emerging AgroSphere ETF, but it too has yet to be approved by the SEC.
Until those ETFs or something similar comes to fruition, investors who want to buy into bitcoin or marijuana don't have any ETF options—that is, unless they venture outside of the U.S.
This brings up another commonality that bitcoin and marijuana share―both are available to invest in through ETFs outside the country. Here we take a look a look a few of those foreign ETFs that adventurous investors may wish to consider.
From Bitcoin Hedge Fund To ETNs
The Bitcoin Tracker One (COINXBT) is the first exchange-traded product that tracks the price of bitcoin. It's a krona-denominated exchange-traded note listed on the Nasdaq OMX in Sweden, along with its sister product, the euro-denominated Bitcoin Tracker Euro (COINXBE).
The origins of these exchange-traded notes are interesting. The current owner of the notes originally ran a bitcoin hedge fund based in Jersey- Channel Islands. That group ended up buying the issuer of the notes from KNC Miner, a now-bankrupt bitcoin mining firm that couldn't compete with Chinese companies.
KNC Miner was using the notes to sell the bitcoins they mined on the open market. When the miner filed for bankruptcy in June 2016, Global Advisors (Jersey) Limited acquired the issuer and took over the note issuance program.
Since the acquisition, assets for the issuer have quickly ballooned from about $10 to $15 million to $100 million thanks to strong demand from investors in Germany and the U.S.
The ETNs Have Tracked Bitcoin Closely This Year.
Unlike the Securities and Exchange Commission in the U.S., which has yet to approve a bitcoin ETF, the Swedish regulatory authorities have been "very open to the concepts of bitcoin and cryptocurrencies in general," said Ryan Radloff, head of investor relations for issuer XBT Provider. His firm has plans for many new products in the cryptocurrency and digital asset space in the future.
Though they don't market to investors in the U.S., anyone interested in buying the ETNs can do so via a global securities electronic trading platform with access to the Nasdaq OMX.
Legal Marijuana In Canada
Like the bitcoin ETF, a marijuana ETF has yet to be listed in the U.S., though the Emerging AgroSphere ETF is in the pipeline. However, that fund may have a tough time getting approved―according to Steven Hawkins, president and co-CEO of Horizons ETFs Management―because of the illegality and stigma associated with marijuana in the U.S.
Horizons is primarily a Canadian ETF company, with 77 strategies listed in the country, including the Marijuana Life Sciences Index ETF (HMMJ), which trades on the Toronto Stock Exchange.
It made sense to launch HMMJ in Canada, because medical marijuana in the country is legal at the federal level (and recreational marijuana will soon be too), while in the U.S., it's only legal in certain states, notes Hawkins.
Getting a marijuana ETF listed on a major U.S. exchange "would be highly improbably in today's current regime," he explained. Moreover, there are no marijuana producing or distributing companies listed on major exchanges in the U.S., whereas in Canada there are many.
Because of that, "there's a lot more 'federally legal' companies in Canada that we could invest in," Hawkins remarked, while also noting that U.S. marijuana companies are technically operating illegal businesses on a federal level.
Strong Flows For New ETF
HMMJ invests in marijuana operating companies, which are primarily Canadian. But it also holds several U.S. companies that have ancillary marijuana-related businesses and biopharmaceutical companies that are working on cannabinoid-based drugs.
Demand for the ETF has been strong, with assets under management currently around $83 million after just three months on the market.
After A Brief Pop, HMMJ Falls After Its Debut.
Third Bitcoin ETF Filed With SEC, but Will They Actually Become Reality?
On January 20, Grayscale Investments, LLC, a wholly-owned subsidiary of Digital Currency Group, filed with the Securities and Exchange Commission (SEC) for its Bitcoin Investment Trust to be listed on the New York Stock Exchange with the intention of launching the first listed Bitcoin ETF in the U.S.
Grayscale Investments seeks to launch its ETF with an initial $500 million public offering according to the filing. This is the third Bitcoin ETF in the U.S. that has been filed with the SEC for approval.
Bitcoin pioneers Cameron and Tyler Winklevoss filed the first Bitcoin ETF back in 2013 with the intention to bring mainstream investors to Bitcoin. The ETF, which is intended for listing on the Bats exchange, has been waiting for SEC approval for over three years now. The Winklevosses’ Bitcoin ETF, the Winklevoss Bitcoin Trust, intends to list 1 million shares at $65 each and will have the ticker “COIN” according to its most recent SEC filing. A decision of whether the ETF will be approved or not by the SEC is expected in March 2017.
The second Bitcoin ETF was filed by SolidX Partners Inc. in July of last year. SolidX also wants to list its insured Bitcoin ETF on the New York Stock Exchange. The SolidX Bitcoin Trust, if approved, will be a passively managed exchange-traded fund with the ticker “XBTC” that provides shareholders with exposure to the daily change in the U.S. dollar price of bitcoin. A final decision on the ETF’s approval is also expected in March 2017.
A Bitcoin ETF would be an excellent vehicle for both institutional and private investors to gain exposure to bitcoin as an asset class without the hassle of having to purchase and securely store the digital currency itself.
Should a Bitcoin ETF receive SEC approval and should investor demand for such an ETF increase, then the inflows into the ETF would have a profound impact on the price of bitcoin in order to keep up with the demand for the ETF.
Will the SEC Approve Bitcoin ETFs?
Given bitcoin’s extreme volatility and China’s influence on the digital currency, the chances of getting a Bitcoin ETF approved, however, are currently rather low.
One of the key reasons ETFs require SEC approval is to protect investors from potential financial harm. Given that the price of bitcoin has been known to drop by 25 percent in a matter of days on the back of negative headlines, such as potential regulatory changes in China or the hacking of bitcoin exchanges, it is unlikely the SEC will consider a Bitcoin ETF a smart investment for retail investors.
Why Buy This Expensive Bitcoin Trust Instead of Actual Bitcoin?
If you're interested in getting invested in the digital currency world, now seems to be as good a time as ever. Bitcoin has seen repeated record-setting price levels, and a host of other digital currencies are becoming increasingly popular around the globe. And yet, there are some reasons why even seasoned investors may be reluctant to get involved in direct investments relating to cryptocurrencies. Fortunately for those people, there is an over-the-counter trust focusing on Bitcoin in particular that can simplify the process. It is called the Bitcoin Investment Trust (GBTC) and it is provided by Grayscale Investments. Here are some of the basic details about the new trust and its relationship to the digital currency itself.
Significant Returns Already
The Bitcoin Investment Trust has won a spectacular set of gains over the past year. According to MicroCap Daily, the trust was trading for less than $100 just one year ago, while in the intervening time it has risen to more than $1000. It has finally settled back to about $800 as of this writing. The trust's success mirrors that of Bitcoin, and that makes sense: the trust is exclusively tied to that cryptocurrency, and its value is derived solely from that of Bitcoin.
Why the Huge Premium for GBTC?
Potential investors are likely wondering why GBTC shares can be found at such a high premium over Bitcoin. The issue seems to lie in supply and demand. While Bitcoin demand has skyrocketed, GBTC has kept its shares outstanding close to 1.7 million in the two years that it has existed. In fact, the ETF seems unlikely to change the number of total outstanding shares in the future, according to the company's head of research, Ihor Dusaniwsky. He explains that "it is unlikely that GBTC's outstanding share amount will climb above 1.7 million anytime soon."
This is not to say that there aren't significant concerns about GBTC as well. Andrew Left of Citron Research has publicly criticized the trust, and Seeking Alpha speculates that his statements may be linked to GBTC's cratering premium relative to Bitcoin, possibly due to investors having sold off their shares in a rush of skepticism. According to Citron, GBTC marks the "most dangerous way to own Bitcoin."
It is useful to note that GBTC didn't always seem this expensive in comparison with Bitcoin. Before Bitcoin's price spiked in the past several weeks, the trust traded on an average premium of just 10% above the crypto currency in 2017. The issue seems to have come about when Bitcoin's demand blew up and GBTC's supply did not change. As Bitcoin continues to spread further into the financial world, it will be interesting to see where GBTC's share prices go as well.
Forecasting Bitcoin ETF Possibilities in 2018
RELATED ARTICLES
Issuers of ETFs remain eager to launch ETFs tied to bitcoin, the largest digital currency by market value, and it probably is not a stretch to say many investors are eagerly awaiting the debut of such products.
Figuring out when U.S. regulators will finally give the nod to bitcoin-related ETFs is another matter altogether. Bitcoin futures debuted on the Cboe in December, followed by a launch on the CME. Nasdaq Inc. is still considering entering the bitcoin futures competition. Previously, market observers and industry experts expected the debut of bitcoin futures to facilitate the launch of bitcoin ETFs, but that has not been the case.
Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies. They are also a key component in the creation of many futures-backed ETFs utilized by a range of investors.
Patiently Waiting for Bitcoin ETFs
“The prospect of a Bitcoin ETF has been widely discussed for the last few years, and despite all previous applications for a US-based fund being rejected or withdrawn, the latest rhetoric from the SEC appears to suggest the commission is ready to consult with industry stakeholders, who may be able to address their concerns such that a viable Bitcoin ETF can finally come to fruition in 2018,” reports CoinJournal.
Direxion, ProShares and VanEck are among a handful of ETF issuers that have withdrawn filings to launch bitcoin ETFs at the request of U.S. regulators. The Securities and Exchange Commission (SEC) requested the issuers withdraw their filings.
“The formal consultation process which was initially started at the end of 2017, is essentially a request for industry stakeholders to provide comments to address the handful of points of contention over Bitcoin ETFs, specifically regarding fair valuation, sufficient liquidity, effective pricing arbitrage and asset custody,” according to CoinJournal.
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I want all my lost access yahoo account 'delete'; Requesting supporter for these old account deletion; 'except' my Newest yahoo account this Account don't delete! Because I don't want it interfering my online 'gamble' /games/business/data/ Activity , because the computer/security program might 'scure' my Information and detect theres other account; then secure online activities/ business securing from my suspicion because of my other account existing will make the security program be 'Suspicious' until I'm 'secure'; and if I'm gambling online 'Depositing' then I need those account 'delete' because the insecurity 'Suspicioun' will program the casino game 'Programs' securities' to be… more
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i dont know what happened but i can not search anything.
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RYAN RAHSAD BELL literally means
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In the search for Anaïs Nin, one of the first few links shows a picture of a man. Why? Since Nin is a woman, I can’t figure out why. Can you show some reason for this? Who is he? If you click on the picture a group of pictures of Nin and no mention of that man. Is it an error?
Repair the Yahoo Search App.
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I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
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I also had At&t try to help me because I have UVERSE for my internet service. My internet was working perfectly. Their Technical Support team member checked the Yahoo Search App and it wouldn't work for him either.
We can go to www.yahoo.com and search for any topic or website. It's just the Yahoo Search App that won't allow anyone to do web searches at all.
I let Google know that the Yahoo Search App installed from their Google Play Store had completely stopped working on May 18, 2018.
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I tried to search for things like www.homedepot.com. The same thing happened. It would say WEBPAGE NOT AVAILABLE. The only thing that changed were all the upper and lower case letters, numbers and symbols.
Then it would again say
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED
This is the same thing that happened when Samsung and At&t tried to do any kind of searches thru the Yahoo Search App.
Yahoo needs to fix the problem with their app.
Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.
I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
I contacted Samsung thru their Samsung Tutor app on my phone. I gave their Technican access to my phone to see if there was a problem with my phone that stopped the Yahoo Search App from working. He went to Yahoo and… more
Bitcoin etf entscheidung
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Bitcoin: Schweden im ETN- Rausch
von Timo Emden
Testen Sie anhand eines kostenlosen Demokontos von IG den Handel des Bitcoin.
(DailyFX.de) – Am 10. März lehnte die amerikanische Aufsichtsbehörde SEC den Winklevoss-Twin- Bitcoin ETF noch ab. Doch die Nachfrage nach der digitalen Münze an den weltweiten Aktienmärkten ist bis dato weiterhin ungebremst. Eine erneute Entscheidung über grünes Licht der SEC steht weiter aus.
Der in Großbritannien ansässige und geregelte Investmentmanager Global Advisors hat zuvor zwei ETN’s ins Leben gerufen, welche im NASDAQ OMX in Schweden gelistet sind. Die beiden ETN’s repräsentieren den Preis und den Wert des Bitcoins.
Eine der beliebtesten Bitcoin- basierten ETN auf dem schwedischen Markt ist XBT Provider, welcher auf der NASDAQ Stockholm notiert und von der schwedischen FSA genehmigt ist. Jede Aktie oder ETN repräsentiert dabei fünf Prozent eines Bitcoins.
Ein weiteres interessantes Asset ist der Bitcoin Tracker One, welcher ebenfalls im NASDAQ Stockholm gelistet ist. Seit letztem Jahr sich der Preis vervierfacht.
Für meine Begriffe ist von einem weiteren Wachstum des Bitcoinmarktes in Europa bzw. Schweden auszugehen. Die Nachfrage nach der digitalen Münze nimmt weiterhin stark zu. Seit der Legalisierung des Bitcoins im Japan seit dem 1. April, Australiens Beseitigung der Doppelbesteuerung und die Anerkennung auf den Philippinen als Währung und Überweisungsmethode sind starke Argumente.
Ebenfalls werden immer mehr große Unternehmen, Hedgefonds und institutionelle Investoren auf den Bitcoin aufmerksam. Dieser Trend dürfte sich m.E. weiter fortsetzen.
Dem Bitcoin könnte eine erneute Aufwärtsbewegung bevorstehen. Bodenbildung macht sich aktuell bei 2.000 US- Dollar breit, welche als Sprungbrett für einen Angriff auf Regionen um 2.400 bzw. 2.700 US- Dollar dienen könnte. Die Marke von 2.400 US- Dollar dürfte den Bullen zumindest temporär einen Strich durch die Rechnung machen. Der Widerstand gilt als Schlüsselmarke im Kampf um neue Aufstiege.
Chart erstellt mit IG Charts (Stundenchart)
Was zeichnet einen erfolgreichen Trader aus und wie kann ich klassische Fehler vermeiden? Lernen Sie noch heute unsere Trading- Leitfäden kennen!
Analyse geschrieben von Timo Emden, Marktanalyst von DailyFX.de
DailyFX stellt Neuigkeiten zu Forex und technische Analysen, die sich auf Trends beziehen, die die globalen Währungsmärkte beeinflussen, zur Verfügung.
Is a Bitcoin ETF a Good Investment?
Main Street investors will need to wait longer to find out after the SEC rejects the proposed exchange-traded fund.
By Ryan Ermey, Staff Writer
Updated March 11, 2017
The Securities and Exchange Commission denied approval of the Winklevoss Bitcoin Trust ETF, an exchange-traded fund that would track the value of digital currency bitcoin. Friday's highly anticipated decision came nearly four years – and a dozen amendments – after the fund was first proposed and delayed indefinitely making gaining access to the currency as easy as logging into your online brokerage account.
QUIZ: Test Your Knowledge of ETFs
Bitcoin is a so-called “cryptocurrency” – an encrypted digital currency created by computer programmers that can be exchanged electronically for goods and services. It serves as an alternative to traditional currencies, such as the U.S. dollar or the euro. For now, you can buy bitcoins on online exchanges, which often require an involved registration process and premium prices. Or you can “mine” them (create them), using extremely sophisticated computer codes. The value of a single bitcoin is determined by investor speculation. Worth almost nothing when it was created eight years ago, bitcoin hit a record high above $1,300 this week, topping the price of an ounce of gold, before tumbling on the heels of the SEC rejection. The rise of bitcoin has been volatile, marked by steep dips that were triggered, in some cases, by high-profile hacks of online bitcoin exchanges.
The ETF proposed by Cameron and Tyler Winklevoss (yes, the same set of twins who claimed Mark Zuckerberg stole their idea for Facebook and sued him over it) would have traded on the Bats Global Markets exchange under the symbol COIN. The fund would have tracked the value of bitcoins, backed by "baskets" of the virtual currency. Like any other ETF, the fund could have been bought or sold through a brokerage account. The SEC expressed concern over the unregulated nature of bitcoin markets, though ETF Trends Editor Tom Lydon said investors could've been relatively confident that the ETF would be structurally sound. That’s to say, it would have accurately tracked the price of bitcoin and would have sufficient security measures in place to deter the sorts of hacks that have cropped up at online bitcoin exchanges.
Eight years into a bull market, Lydon says, the appeal of such an instrument is apparent. “Alternative investing is something that individual investors, advisers and institutions are thinking about. Bitcoin is an area of the market that’s not well-correlated with stocks, bonds or even other currencies,” he says.
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But even if the ETF had been deemed suitable for individual investors, like any investment, Lydon says, you need to look under the hood. Two other bitcoin ETFs are currently under review by the SEC, and it's unclear what, if any, next steps the Winklevoss brothers will take. Bitcoin is surprisingly widely held and regularly traded — but nowhere near the level of mainstream ETFs. Because of the way they’re created, bitcoins are available on a limited basis, which, based on increased demand, would help increase the price. These factors check many investors’ boxes for alternative investments. But investors who own any bitcoin ETF would need to understand the factors that cause prices to fluctuate and have a plan in place for rapid swings in the marketplace. For individual investors, tracking the complex world of digital currencies might be too much to ask. The risk factors listed in the prospectus include attacks by malicious actors and botnets that could corrupt the bitcoin code, among other things.
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Your search engine does not find any satisfactory results for searches. It is too weak. Also, the server of bing is often off
I created a yahoo/email account long ago but I lost access to it; can y'all delete all my yahoo/yahoo account except for my newest YaAccount
I want all my lost access yahoo account 'delete'; Requesting supporter for these old account deletion; 'except' my Newest yahoo account this Account don't delete! Because I don't want it interfering my online 'gamble' /games/business/data/ Activity , because the computer/security program might 'scure' my Information and detect theres other account; then secure online activities/ business securing from my suspicion because of my other account existing will make the security program be 'Suspicious' until I'm 'secure'; and if I'm gambling online 'Depositing' then I need those account 'delete' because the insecurity 'Suspicioun' will program the casino game 'Programs' securities' to be 'secure' then it'll be 'unfair' gaming and I'll lose because of the insecurity can be a 'Excuse'. Hope y'all understand my explanation!
I want all my lost access yahoo account 'delete'; Requesting supporter for these old account deletion; 'except' my Newest yahoo account this Account don't delete! Because I don't want it interfering my online 'gamble' /games/business/data/ Activity , because the computer/security program might 'scure' my Information and detect theres other account; then secure online activities/ business securing from my suspicion because of my other account existing will make the security program be 'Suspicious' until I'm 'secure'; and if I'm gambling online 'Depositing' then I need those account 'delete' because the insecurity 'Suspicioun' will program the casino game 'Programs' securities' to be… more
chithidio@Yahoo.com
i dont know what happened but i can not search anything.
Golf handicap tracker, why can't I get to it?
Why do I get redirected on pc and mobile device?
Rahyaftco@yahoo.com
RYAN RAHSAD BELL literally means
Question on a link
In the search for Anaïs Nin, one of the first few links shows a picture of a man. Why? Since Nin is a woman, I can’t figure out why. Can you show some reason for this? Who is he? If you click on the picture a group of pictures of Nin and no mention of that man. Is it an error?
Repair the Yahoo Search App.
Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.
I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
I contacted Samsung thru their Samsung Tutor app on my phone. I gave their Technican access to my phone to see if there was a problem with my phone that stopped the Yahoo Search App from working. He went to Yahoo and I signed in so he could try to fix the Yahoo Search App not working. He also used another phone, installed the app from the Google Play Store to see if the app would do any kind of search thru the app. The Yahoo Search App just wasn't working.
I also had At&t try to help me because I have UVERSE for my internet service. My internet was working perfectly. Their Technical Support team member checked the Yahoo Search App and it wouldn't work for him either.
We can go to www.yahoo.com and search for any topic or website. It's just the Yahoo Search App that won't allow anyone to do web searches at all.
I let Google know that the Yahoo Search App installed from their Google Play Store had completely stopped working on May 18, 2018.
I told them that Yahoo has made sure that their Yahoo members can't contact them about anything.
I noticed that right after I accepted the agreement that said Oath had joined with Verizon I started having the problem with the Yahoo Search App.
No matter what I search for or website thru the Yahoo Search App it says the following after I searched for
www.att.com.
WEBPAGE NOT AVAILABLE
This webpage at gttp://r.search.yahoo.com/_ylt=A0geJGq8BbkrgALEMMITE5jylu=X3oDMTEzcTjdWsyBGNvbG8DYmyxBHBvcwMxBHZ0aWQDTkFQUEMwxzEEc2VjA3NylRo=10/Ru=https%3a%2f%2fwww.att.att.com%2f/Rk=2/Es=plkGNRAB61_XKqFjTEN7J8cXA-
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED
I tried to search for things like www.homedepot.com. The same thing happened. It would say WEBPAGE NOT AVAILABLE. The only thing that changed were all the upper and lower case letters, numbers and symbols.
Then it would again say
could not be loaded because:
net::ERR_CLEARTEXT_NOT_PERMITTED
This is the same thing that happened when Samsung and At&t tried to do any kind of searches thru the Yahoo Search App.
Yahoo needs to fix the problem with their app.
Yahoo Search App from the Google Play Store on my Samsung Galaxy S8+ phone stopped working on May 18, 2018.
I went to the Yahoo Troubleshooting page but the article that said to do a certain 8 steps to fix the problem with Yahoo Services not working and how to fix the problem. Of course they didn't work.
I contacted Samsung thru their Samsung Tutor app on my phone. I gave their Technican access to my phone to see if there was a problem with my phone that stopped the Yahoo Search App from working. He went to Yahoo and… more
Bitcoin ETF Fast Track Derailed by SEC Liquidity, Safety Worries
Bitcoin Beliefs: Jamie Dimon and Mike Novogratz
The next step in the bitcoin revolution will take a bit longer than some anticipated.
The U.S. Securities and Exchange Commission has slammed the brakes on a dozen bitcoin exchange-traded funds and two cryptocurrency mutual funds since Jan. 8, making the week a watershed for Washington pushing back on the investment craze of the moment.
The regulator’s concerns include the safety of tying frequently traded ETFs to potentially illiquid assets and whether funds can be accurately valued when prices for digital coins are all over the map, said people with knowledge of the matter.
The go-slow approach isn’t what financial firms expected. When bitcoin futures started trading last month on CME Group Inc. and Cboe Global Markets Inc. exchanges, it triggered speculation that there would soon be a range of crypto ETF and mutual fund offerings. That in turn would draw hordes of new investors and lift bitcoin even higher after it surged more than 1,400 percent last year.
“This is not business as usual, it’s brand new terrain,” said Javier Paz, a senior analyst at consultancy Aite Group. “The SEC’s approach is prudent and a sign of the times. Somebody needs to be the grown-up in the room, to feel comfortable about handing out the keys to the ETF world.”
An SEC spokeswoman didn’t respond to a request for comment.
Several fund companies were told by the SEC to pull their applications after the regulator’s staff said it was worried about protecting investors, said the people who asked not to be named in discussing private conversations. The agency also wants more time to review whether the proposed funds actually comply with U.S. securities laws, considering that some investment vehicles would have been based on futures, while others would directly trade bitcoin, which is bought and sold on lightly regulated exchanges.
This week’s withdrawals included four ProShares proposed ETFs and one from VanEck, according to SEC filings. A mutual fund sponsored by the Cboe also pulled its registration. In announcing its plans to withdraw Jan. 8, Direxion Shares ETF Trust said the SEC “expressed concerns regarding the liquidity and valuation of the underlying instruments” the fund planned to invest in.
Winklevoss Rejection
Last March, the SEC rejected a proposal to list an ETF backed by the Winklevoss twins, Tyler and Cameron, who are founders of Gemini, a bitcoin exchange. At the time, the regulator raised concerns that exchanges wouldn’t be able to conduct adequate surveillance of the underlying market. Another issue was worries that hedging would be close to impossible because of the lack of bitcoin derivatives.
Many traders had assumed that the existence of CME and Cboe futures contracts would resolve the hedging problem. But in recent meetings with financial industry representatives, SEC staff has indicated that bitcoin futures themselves don’t guarantee it will green-light ETFs based on the cryptocurrency, according to one person familiar with the discussions.
The SEC has never developed comprehensive policies for approving ETFs, which are similar to mutual funds but trade like stocks. Firms that want to get into the business apply and wait for the agency to give them the all clear. Once companies get the SEC’s sign off, they’re able to list ETFs tied to all sorts of assets and indexes without going through a protracted application process each time.
Still, SEC staff told financial firms that the truncated process, which allows funds to go live after 75 days with little ability for the agency to stand in the way, wasn’t appropriate for bitcoin-related funds, said the people. That’s largely because of the legal questions raised by such untested products. The funds could ultimately still start trading if they allay the regulator’s concerns.
When the SEC rejected the Winklevoss’s proposal, officials said they wanted to see a robust, regulated derivatives market, David Shillman, an associate director in the SEC division that oversees exchanges, said at in industry conference in November.
Trading on CME and Cboe thus far hasn’t been particularly robust. Many brokers have been reluctant to participate or give access to their clients because of concerns about the mostly unregulated spot markets for bitcoin and those that have gotten involved have set extremely high margin requirements.
So far in 2018, combined daily trading of Cboe and CME’s futures contracts have ranged between $106 million and $181 million worth of bitcoin, according to data compiled by Bloomberg. There was a burst of activity on Dec. 22, with more than $360 million traded.
That’s pretty good for products born a month ago, but nothing compared with established contracts. S&P 500 Index futures trading routinely exceeds $150 billion a day, for instance.
“The futures market is aiming to tap into the popularity of bitcoin and institutionalize that demand, but institutions are still tiptoeing into the market and much of the initial impetus remains retail-driven,” said Aite Group’s Paz. “The volumes are very, very light. The large houses aren’t facilitating the clearing or trading of bitcoin futures for their clients. So that closes an important door for the vibrancy of bitcoin futures.”
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