Monthly Archives: February 2017

A Step Forward in Microsoft’s Legal Battle for Transparency about Government Data Requests – EFF

Posted: February 18, 2017 at 3:56 am

Last week, a federal court in Seattle issued a ruling in Microsofts ongoing challenge to the law that lets courts impose indefinite gag orders on Internet companies when they receive requests for information about their customers. Judge James Robarthe of recent Washington v. Trump fameallowed Microsofts claim that the gags violate the First Amendment to proceed, denying the governments motion to dismiss that claim. Its an important ruling, with implications for a range of government secrecy provisions, including national security letters (NSLs). Unfortunately, the court also dismissed Microsofts Fourth Amendment claim on behalf of its users.

When tech companies cant tell users that the government is knocking

Before looking at the substance of Judge Robarts ruling, its worth remembering why EFF thinks Microsofts lawsuit is important. In fact, wed go so far as to say that challenging gag orders imposed alongside government data requests is one of the key digital civil liberties issues of our time. Thats true for at least two reasons:

First, there has been a sea change in where we keep our sensitive personal information papers and effects protected by the Fourth Amendment and records of First Amendment-protected speech and associations. Just twenty or thirty years ago, most or all of this information would have been found in peoples homes. In order to get at your informationwhether by breaking down your door or serving you with a grand jury subpoenathe government usually couldnt help tipping you off. These days, private information is more likely to be stored in Microsoft Office 365 or with another third-party provider than a home office. In that case, you wont know the government is interested in your information unless you hear from the government or the third-party provider. But the government isnt always required to notify the targets of data requests, and it routinely gags providers from notifying their users. The long-standing defaultnotice that the government is after your informationhas in just a short time effectively flipped to no notice.

Second, gags distort the publics understanding of government surveillance and correspondingly place far more responsibility on providers. The statutory provision at issue in Microsofts lawsuit, 18 U.S.C. 2705, applies in criminal cases. This statute allows the government to gag service providers if a court finds that informing the user will result in one of several enumerated harmsdeath or injury to a particular person, destruction of evidence, witness tampering, and so on. But as Microsofts complaint explains, Section 2705 gag orders accompany at least half of the data demands the company receives, and courts often grant them without explicit findings of potential harm. In many cases, they also do so without setting a date for the gag to dissolve. The result is a de facto permanent gag order. Thats an abuse of what is intended as a limited power, granted to the government to protect specific, sensitive investigations.

Unless a provider takes extraordinary stepslike filing a facial constitutional challenge as Microsoft didits likely that the public wont be aware of this abuse. This intensifies the role that providers play as trustees of our data. Thats why EFF tracks both transparency reports and user notification as part of our annual Who Has Your Back report. We dont just rely on companies to keep our data secure, we also need them to stand up to the government on our behalf. Its a point often missed by those who dismiss companies growing commitments to privacy as empty marketing. If not Microsoft, Apple, Google, Facebook and all the others, then who?

The ruling: first party prior restraints and third-party Fourth Amendment rights

Despite the importance of these issues, the government argued that Microsofts challenge should be bounced out of court at the preliminary motion to dismiss stage. On the First Amendment claim, at least, the court disagreed. Microsofts basic argument will be familiar if youve followed EFFs NSL cases: when the government prevents you from speaking in advance, its known as a prior restraint. Under the First Amendment, prior restraints must meet exacting scrutiny and are rarely constitutional. Here, the court found that Microsoft had more than adequately alleged that Section 2705 does not meet this exacting scrutiny because it does not require courts to time-limit gags to situations where they are actually necessary based on the facts of the case.

This is nearly identical to one of the issues in EFFs NSL casesNSLs similarly allow the FBI to gag service providers indefinitely.However, NSLs are even more egregious in several ways: the FBI can issue them without any involvement by a court at all, and it need not even claim that one of the specified harms will actually result without an NSL gag. We hope the Ninth Circuit will consider our NSL clients arguments about their First Amendment rights as thoroughly as Judge Robart did here.

Finally, the court reached an unsatisfying conclusion about Microsofts attempt to raise its users Fourth Amendment rights. As EFF explained in our amicus brief earlier in the case, notice of a search is a core part of the Fourth Amendments protections. When Microsoft is precluded from notifying users, it is the only party with knowledge of the search and therefore should be able to raise its users Fourth Amendment rights. Nevertheless, the court found that Fourth Amendment rights are inherently personal and cannot be raised by a third party, leading it to dismiss Microsofts claim. We think thats wrong on the law, and we hope Microsoft will consider seeking leave to appeal. Meanwhile, well watch as the case progresses on Microsofts First Amendment claim.

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A Step Forward in Microsoft's Legal Battle for Transparency about Government Data Requests - EFF

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Judge sides with SLCPD in shooting of Geist the dog – fox13now.com

Posted: at 3:56 am

Source: Justice for Geist Facebook page

Source: Justice for Geist Facebook page

SALT LAKE CITY A federal judge has sided with police in the shooting of a dog as officers looked for a missing boy.

In a ruling handed down Friday night, U.S. District Court Judge Robert Shelby dismissed Sean Kendalls claims of a Fourth Amendment violation of his rights. He granted summary judgment for Salt Lake City and sent the case back to state court to be litigated.

This case is tragic on several levels. Parents feared their child missing, officers urgently responded, and Kendall lost his beloved companion animal. The court is mindful of the strong reactions this case has aroused among animal owners, parents, law enforcement, and community members, Judge Shelby wrote.

The case has exposed tensions that can arise between important competing interests, and the court has done its best to resolve these tensions while constraining its analysis to the facts presented by the parties and the established law.

Kendall sued Salt Lake City over the 2014 shooting of his dog, Geist, whobarked and ranat an officer who wandered into his backyard searching for the missing boy. The child was later found inside his own home.

Judge Shelby ruled that Kendall failed to establishan unconstitutional search and seizure violation under the Fourth Amendment.

In sum, the court concludes that even if (Officer) Olsens warrantless sweep of Kendalls backyard was a Fourth Amendment search, it was not unconstitutional because it was justified by exigent circumstances. And even in the event it was an unconstitutional search, Olsen would be entitled to qualified immunity because his mistake as to what the law requires would be reasonable, the judge wrote.

Reached by FOX 13 late Friday, Kendalls attorney, Rocky Anderson, said he would appeal to the 10th U.S. Circuit Court in Denver.

Of course we vigorously disagree, he said. We fully expect to prevail, ultimately. It would be an extremely frightening prospect if police could go throughout an entire geographic region and search in Fourth Amendment protected areas.

Anderson said the ruling enforced a shoot first culture, adding he believed there was no reason to shoot Geist under any circumstances.

Judge Shelby previously ruled against Salt Lake City police, who sought to enforce a $10,000 settlement offer extended to Kendall.

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Judge sides with SLCPD in shooting of Geist the dog - fox13now.com

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Colorado Senate debates Second Amendment bill – Cortez Journal

Posted: at 3:55 am

Enlargephoto

Associated Press Some of the handguns with 15-round magazines that were banned in 2013 in Colorado.

DENVER The Republican-controlled state Senate on Thursday hosted another debate about expanding Second Amendment rights.

Previous debates focused on magazine capacity and training of school employees to carry firearms.

Thursdays discussion concerned Senate Bill 6, which would amend the concealed carry law to include a provision allowing active-duty and honorably discharged military personnel younger than 21 to apply for permits. The bill was adopted and scheduled for a final reading before moving to the House.

Half her unit was deployed in Afghanistan. They can go to Iraq or can go to Afghanistan and defend themselves, but they cannot come back here to the state of Colorado, because they are under the age of 21, to get a conceal carry permit, Cooke said.

When deployed, these military personnel are allowed to carry guns, but they are closely supervised by superior officers, Kagan said. There are very strict rules about when, where and how they carry those firearms and when, where and how they use them.

These 18- to 20-year-olds are incredible young people who have been through a great deal of stress, a great deal of hardship, a great deal of loss, she said. They have seen things we will never see, and what really gets under my skin is that we seem to lump them in with everyone else. They are not everyone else.

The bill represents the sixth piece of legislation focusing on gun laws this session.

Four of these bills have originated in the Republican-held Senate, were passed by committees to the full floor and are expected to go to the House, which the Democrats control.

The other two originated in the House, but both died in the House State, Veterans and Military Affairs Committee, the so called kill committee.

This committee is the likely landing spot for Second Amendment bills passed by the Senate.

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First Amendment survives challenge from Florida gun law – Minnesota Public Radio News (blog)

Posted: at 3:55 am

If youre at all a fan of the First Amendment, there was plenty to like about todays decision by the 11th U.S. Circuit Court of Appeals striking down a Florida law that prohibited doctors from asking whether there are guns in the home (heres the full law in question).

But lets focus on the concurring opinion of William Pryor, who was on the short list to replace Justice Antonin Scalia on the U.S. Supreme Court.

Pryor is a conservative, so he took great pains to point out that the decision is not about the Second Amendment; its about the First.

And much of his opinion was aimed strictly at conservatives, apparently anticipating their criticism.

Heres some examples.

If we upheld the Act, we could set a precedent for many other restrictions of potentially unpopular speech. Think of everything the government might seek to ban between doctor and patient as supposedly irrelevant to the practice of medicine. Without the protection of free speech, the government might seek to ban discussion of religion between doctor and patient. The state could stop a surgeon from praying with his patient before surgery or punish a Christian doctor for asking patients if they have accepted Jesus Christ as their Lord and Savior or punish an atheist for telling his patient that religious belief is delusional.

Without the protection of free speech, the government might seek to censor political speech by doctors. The state might prevent doctors from encouraging their patients to vote in favor of universal health care or prohibit a physician from criticizing the Affordable Care Act. Some might argue that such topics are irrelevant to a particular patients immediate medical needs, but the First Amendment ensures that doctors cannot be threatened with state punishment for speech even if it goes beyond diagnosis and treatment.

Pryor said doctors already discuss highly controversial topics with patients. Whether to play football, or telling teenagers to abstain from sex, and recommending organ donation.

He called the very idea a thought experiment and then lowered the boom with this beautiful piece of prose:

If today the majority can censor so-called heresy, then tomorrow a new majority can censor what was yesterday so-called orthodoxy.

If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion . . . . Our decision applies this timeless principle to speech between doctors and patients, regardless of the content. The First Amendment requires the protection of ideas that some people might find distasteful because tomorrow the tables might be turned.

Todays decision was not close. The vote was 10-to-1.

The one belonged to Gerald Bard Tjoflat, who is 87 years old and is the longest-service justice in the U.S. Court of Appeals system.

He does see the case as a Second Amendment question:

The majority and I agree that Florida possesses a substantial interest in protecting both Floridians reasonable expectation of privacy during medical treatment and the full exercise of their Second Amendment rights. If that is so, then it is hard to imagine a law more precisely tailored to advance those substantial state interests than the one presently before us. The Act does not categorically restrict the speech of medical professionals on the subject of firearms. Instead, it simply requires an individualized, good faith judgment of the necessity of speech related to firearm ownership to provide competent medical care to a patient.

a constitutional right is a right to be free of governmental restrictions on the exercise of the right it is not a right to be free of private criticism for the exercise of the right, much less private questions about the exercise of the right, law professor Eugene Volokh in his Washington Post column analyzing todays decision. A doctor no more violates your Second Amendment rights by asking you about whether you own a gun than the doctor violates your First Amendment rights by asking you how much TV your children watch, or your Lawrence v. Texas sexual autonomy rights by asking you whether youve been having sex with multiple partners.

Heres the courts full opinion:

Bob Collins has been with Minnesota Public Radio since 1992, emigrating to Minnesota from Massachusetts. He was senior editor of news in the 90s, ran MPRs political unit, created the MPR News regional website, invented the popular Select A Candidate, started the two most popular blogs in the history of MPR and every day laments that his Minnesota Fantasy Legislature project never caught on.

NewsCut is a blog featuring observations about the news. It provides a forum for an online discussion and debate about events that might not typically make the front page. NewsCut posts are not news stories but reflections , observations, and debate.

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Major First Amendment victory in Docs v. Glocks case – Pacific Legal Foundation (PLF) (press release) (blog)

Posted: at 3:55 am

Yesterday, the 11th Circuit issued its en banc opinions in Wollschlaeger v. Gov. of the State of Florida, AKAthe Docs v. Glocks case. As previously discussed here, here, and here, the case concerns whether Florida can prohibit doctors from asking their patients about their gun ownership or possession unless the question is directly relevant to a patients care. The issue is controversial because many doctors, especially pediatricians, often routinely ask patients (or their parents) questions about potential hazards in the home, be it swimming pools, poisons, or guns.

The primary legal issue before the 11th Circuit was whether the Florida law restricted speech based on its content and the speaker, and if so, what level of scrutiny should be applied to determine if the restriction is unconstitutional. Last year, PLF filed an amicus brief in the case arguing that all content-based speech restrictions should receive strict scrutiny, regardless of whether the speech is made in a professional setting. The second issue in the case (which PLF does not take a position on) concerned the anti-discrimination provision of the law. The Court upheld that provision narrowly: a move that even the doctors were amenable to,as indicated during oral argument.

In the first of its majority opinions*, the Court easily determined that the challenged law restricted speech based on its content and speaker. Next, the Court declined to apply deferential review under the professional speech doctrine. As discussed at length in PLFs brief, the professional speech doctrine is unprincipled and unsupported by a majority of the Supreme Court, so the 11th Circuits rejection of that standard in this case is most welcome. Finally, applying the U.S. Supreme Courts 2011 decision inSorrell v. IMS Health,the Court held that the law could not survive heightened scrutiny, so it declined to decide whether strict scrutiny was warranted. In short, the Court thoroughly dismantled the States justifications for the speech-restricting provisions, generally holding that the State offered insufficient actual evidence to justify restricting the speech of doctors.

There are also some additional things worth mentioning from the two concurring opinions. The first concurrence, written by Judge Wilson, would have applied strict scrutiny to strike down the speech-restricting portions of the law. This is particularly noteworthy because Judge Wilson was on the original panel that wrote three separate opinions before the case was taken en banc. Judge Wilson penned dissents to all three of those opinions, but with his concurrence yesterday he announced for the first time his conclusion that strict scrutiny is appropriate in light of the Supreme Courts 2015 decision in Reed v. Town of Gilbert.Second, the concurrence written by Judge William Pryor and joined by Judge Hull, reiterates that this case does not create a clash between the First and Second Amendments. While Docs v. Glocks is certainly catchy, it never accurately described the legal and constitutional issues presented in the case.

Even though the 11th Circuit did not go on to apply strict scrutiny to content- and speaker-based speech restrictions in a professional context, this case is certainly a strong win for the vindication of the right to free speech protected under the First Amendment. Doctors and speech advocates should certainly celebrate that.

*With an unusual move, the Court issued two majority opinions. I consider the opinion of Judge Jordan to be the primary opinion, though, and in any event Judge Jordans opinion is the one that announces the bulk of the Courts opinion on the First Amendment questions of interest to PLF.

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Major First Amendment victory in Docs v. Glocks case - Pacific Legal Foundation (PLF) (press release) (blog)

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Cryptocurrency Startup BlockchainOS Seeks Crowdfunding to … – Finance Magnates

Posted: at 3:53 am

BlockchainOS, a blockchain technology company from Korea, has announced an ICO (Initial Coin Offering) of its native cryptocurrency BOScoin from April 17th to May 31st, 2017.

To unlock the Asian market, register now to the iFX EXPO in Hong Kong.

BOScoin utilizes ontology language and timed automation technologies to try and solve persistent issues in decentralized systems. Itspresale in the Korean market already gathered over BTC2,000 (approximately $2 million) during a two-month period.

Yezune Choi, the BlockchainOS CTO and General Executive Director, commented, There are two primary issues that need to be solved in the cryptocurrency and blockchain fields. The first issue is the integrity of the Dapps (Decentralized Applications) on the blockchain.

The second issue is the consensus mechanism needed for confirming data on the blockchain and the decision-making process for revising policies implemented in the core blockchain algorithm. We have been working on these core problems for over 2 years and are now opening our research to the public.

BOScoin is a fixed supply cryptocurrency that unlike Bitcoin or Ethereum, BOScoin sends a portion of the coins issued to a public account called the Commons Budget. Coins held in the Commons Budget can be used through the voting system to decide on future BOScoin policies. And since voting right is given to only the node operators who invested in the coin, the developers expect that funds from the Commons Budget are likely to be used for the betterment of the coin.

Trust Contracts are pre-defined programs or rules that users can create. Similar to Ethereum, the BOScoin team is also aiming to create a general-purpose language on top of the blockchain so anyone can write, upload, and execute contracts. However, BOScoins approach is technically different from Ethereum.

The BOScoin team believes security is the most important principle for smart contracts on the blockchain. As decentralized systems become more complex, these systems are bound to make mistakes and break. They say that the failure of DAO project from Ethereum is the exact case of it.

BOScoin say they believe in the importance of being cautious when dealing with digital assets. This is the reason they selected the Web Ontology Language (OWL) and TAL, the timed automata language, for the development of Trust Contracts. By using OWL and TAL for building contracts, due to the nature of the languages, they promise that Trust Contracts can be mathematically proven to be trustworthy and operate without any unintended consequences.

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China’s Bitcoin Drama Isn’t A Financial Meltdown – Forbes

Posted: at 3:52 am


Forbes
China's Bitcoin Drama Isn't A Financial Meltdown
Forbes
China, currently the world's largest Bitcoin trader, has caused some complications for the cryptocurrency since the beginning of the year. The amount of Bitcoin traded in the country has plummeted from 10 million a day to 30,000-90,000 due to 'abnormal ...
Bitcoin traders look to other digital currencies for returnsCNBC
Size Matters: Japan Becomes Largest Bitcoin Exchange Market, Beats China and USCoinTelegraph
Bitcoin Tracker: Denouement?PYMNTS.com
CryptoCoinsNews -The Merkle -Brave New Coin
all 16 news articles »

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China's Bitcoin Drama Isn't A Financial Meltdown - Forbes

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What Is Bitcoin’s Correlation With Other Financial Assets? – Seeking Alpha

Posted: at 3:52 am

I'm strongly considering entering into a substantial investment in bitcoin as part of my passively managed, fully long portfolio. Before I do that, I decided to look into two questions regarding bitcoin's role in a portfolio:

My reasoning was that, if possible, it would be preferable to replicate exposure to bitcoin using existing financial assets because there are still substantial risks to owning bitcoin. First, a plot of bitcoin's price in both a linear and log scale to place the following analysis in context.

Can Bitcoin Be Considered a Financial Asset?

Before calculating bitcoin's correlation to other financial assets, it's useful to take a step back and think of whether bitcoin can be considered a financial asset based on its fundamental characteristics. And if bitcoin is a financial asset, how should it be classified?

A useful framework for thinking about this is in Robert J. Greer's paper, "What is an Asset Class, Anyway?" In this paper, Greer defines an asset class as "a set of assets that bear some fundamental economic similarities to each other, and that have characteristics that make them distinct from other assets that are not part of that class."

He proposes that any asset can be classified into one of three super classes:

In the real world, not every asset falls neatly into one of the three categories. Gold, for example, is both a consumable asset and a store of value asset. It's arguable that U.S. sovereign bonds are both a capital asset and a store of value asset. But it's still a useful framework to keep in mind when thinking about portfolio construction.

Where does bitcoin fall in this framework? Bitcoin can be safely categorized as a store of value asset in that it doesn't generate income, you can't consume it, and yet it has economic value. Store of value assets are often referred to by other names, including "safe haven assets" and "flight to safety assets". Thus, we should expect a priori that bitcoin should have a higher correlation to other store of value assets, including gold, other precious metals, and safe haven currencies like the Swiss franc, U.S. dollar, and Japanese yen.

Testing Bitcoin's Correlation Using the Brute Force Approach

In the past few years, ETF offerings have become sufficiently broad to represent virtually all asset classes across all major countries and geographies. ETF historical prices, therefore, represent a fairly high-quality source of asset returns. I wrote about how to obtain this data in a previous post: How to Scrape Data for Over 1,900 ETFs.

I first tested bitcoin's correlation to other financial assets using what I call the brute force approach: I calculate the correlation between bitcoin's weekly return and the weekly return of all ETFs with over $10 million in assets and plot the results in the following histogram.

The interpretation is that the correlation between bitcoin and other financial assets is extremely low. Most asset classes have a correlation between -0.1 and +0.1. The few ETFs with correlations outside of this range were mainly explained by the fact that some ETFs were launched recently and thus the correlation between bitcoin and these ETFs was largely spurious in nature.

This result was a bit disappointing since I was originally hoping to replicate bitcoin's exposure using a collection of highly correlated ETFs. On the other hand, this is a strong argument for including bitcoin as a significant part of a portfolio of risky assets. Finding and adding an uncorrelated asset to a portfolio can act as a powerful source of diversification by increasing the portfolio's sharpe ratio. There are extremely few assets that are this uncorrelated with other assets and that makes bitcoin extremely desirable from a portfolio construction perspective.

Testing Bitcoin's Correlation Using the Refined Approach

I decided to look into bitcoin's correlation further using a refined approach by calculating the one-year rolling correlation between bitcoin's weekly returns and the weekly returns of selected ETFs. There is evidence that bitcoin has become a more mature asset class over time in that its volatility has reduced and it has started to react more to macroeconomic factors and geopolitical events rather than things that are specific to bitcoin itself.

Below I plot of the one-year rolling correlation between bitcoin's weekly returns and the weekly returns of a selection of risky assets followed by a plot of a selection of safe assets.

The interpretation is that even looking at a one-year rolling window, the correlation remains low with many correlations oscillating between positive and negative. Current correlation is still low even though bitcoin has had time to mature into a legitimate asset class.

Remember, I had expected a priori that bitcoin would have a higher correlation to these safe, store of value assets. Originally, I had hoped to replicate bitcoin exposure using a combination of gold, US sovereign bonds, and foreign currencies. These results strongly suggest that this is not possible and that bitcoin is a unique, uncorrelated asset class that is not strongly affected by the macroeconomic factors that drive most asset classes.

Doing this analysis has given me conviction that bitcoin should be a part of my passively held, long-only portfolio. First, there aren't that many store of value assets in the first place. There's gold, US sovereign debt, safe haven currencies, and that's it. Second, it's surprising that bitcoin's correlation is this low, even among other store of value assets.

At the same time, there are strong theoretical arguments that bitcoin will serve as a hedge against harmful geopolitical events due to its decentralized nature. There's a growing body of empirical evidence of this also with bitcoin price spiking in response to both Brexit and Donald Trump's win.

Bitcoin is uniquely positioned to hedge against geopolitical risks but remain unaffected by the macroeconomic factors that drive other store of value assets.

Exposure to bitcoin can be obtained either by buying bitcoin directly, through the upcoming bitcoin ETF (Pending:COIN), or the Bitcoin Investment Trust (OTCQX:GBTC).

The code for this post can be found on my Github.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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What Is Bitcoin's Correlation With Other Financial Assets? - Seeking Alpha

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NH Lawmakers Advance Proposed Bitcoin MSB Exemption – CoinDesk

Posted: at 3:52 am

Legislators in New Hampshire have advanced a bill aimed at carving out regulatory exceptions for certain bitcoin businesses, public records show.

As reported by CoinDesk last month, New Hampshire'sHB 436 seeks to create a regulatory exception for persons "using transactions conducted in whole or in part in virtual currency" who may otherwise be considered money transmitters under current laws.

Sponsored by state rep Barbara Biggie with Representative Keith Ammon as a co-sponsor the bill was passed along to the NH House Commerce and Consumer Affairs Committee. On 16th February, according to LegiScan, an 11-9 majority of the committee approved the bill to advance to the House floor for a vote, the date of which is not immediately apparent.

The bill also seeks to update the state's definitions for virtual currency with a revised version that would read:

"'Virtual currency' means a digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account or a store of value, but does not have legal tender status as recognized by the US government."

Despite the movement, however, there's no guarantee that the bill will pass.

Legislators in the state have expressed a degree of aversion to the tech in the past, killing a bill proposed last year that, if passed, would have allowed state citizens to pay their taxes in bitcoin.

Image via Shutterstock

New HampshireRegulation

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Bitcoin ETFs For Dummies – ETF.com

Posted: at 3:52 am

Spencer Bogart is vice president of equity research for Needham & Co. He joined the firm in 2014 and currently leads the research efforts on blockchain technology and bitcoin while supporting research on cloud software (SaaS) companies. ETF.com recently sat down with Bogart, a former ETF.com analyst, to get his take on all the important developments in the bitcoin market ahead of the key SEC decision on the Winklevoss ETF, expected within the next month.

ETF.com: Before we jump into more specifics, in a nutshell, how would you describe what bitcoin is to the layperson?

Bogart: Bitcoin is peer-to-peer digital cash that's not issued by any central authority.

ETF.com: Tell us about the highly anticipated decision that's coming from the SEC. What is it ruling on and what are the odds the ruling will be positive? Spencer: There's a number of bitcoin ETFs that are going through the regulatory approval process. The one that's been going through the process the longest is the Winklevoss bitcoin ETF [Winklevoss Bitcoin Trust (COIN)]. That's been going on for about 3 1/2, four years now.

The exchange they would like to list that particular ETF onwhich in this case is Bats [owner of ETF.com]has filed a proposed rule change, which would be necessary to list the ETF. It's that proposal that essentially we've been watching go through the regulatory approval process.

At each point along the way, the SEC has had the option to approve, disapprove the ETF or to extend its time to make a decision. All along the way, its chosen the opportunity to extend the time to make a decision, including submitting requests for public comments.

Well now see an end to that process before March 11, which is the deadline. Before that, well either get an approval, a disapproval or Bats will withdraw its request for a rule change. Or, if no decision is made by March 11, then the rule change is automatically approved.

ETF.com: What factors are the SEC considering?

Bogart: I don't have any inside information, but my sense is that the majority of the things that the SEC is particularly concerned about revolve around bitcoin itself as opposed to anything specific about the Winklevoss filing.

They're asking if a digital asset such as bitcoinwhich, unlike a commodity doesn't have a physical form, and unlike a security or derivative, is not under any kind of regulatory supervisionis a suitable underlying asset for an ETF.

At the highest level, that's the kind of thing they're considering. A little bit more in the weeds they're asking if the specific markets that bitcoin trades on are stable, fair and efficient, and if they facilitate or enable or encourage any kind of market manipulation.

And then of course, there are the factors that are more specific to the ETF itself, which I think, in this case, probably the most important ones are what do you use as a reference price for bitcoin, and how are you going to securely store that bitcoin?

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