[21]

> why would anyone want to immediately lose 20% of their investment?...

It's called insurance, just like after you buy a house you immediately insure it by paying a premium of x% of it's value.

In this case, you insure against someone in the future claiming those coins were stolen from him.

The investors want exposure to the bitcoin price, but not to some of the risks, so they factor them out as much as possible.

[dgant]

It's telling that the risk premium is 20%.

[wmf]

This seems very high; have institutional investors ever had problems selling "tainted" coins?

[badge]

Do you have a source? Sounds like you just made that up.

Investors, especially large institutions will have teams of lawyers who would would have paperwork from the party they purchase from vetting the purchase. Their insurance is the law and an ability to hold the seller responsible for loss in any case where that risk might exist.

No one pays 20% markup on a car, or gold, or a diamond ring under normal circumstances.

Washing illicit money though paying miners for their new Bitcoins is an established method for money laundering.