VanEck Reignites Debate Over Bitcoin ETFs With Recent SEC Filing
New York-based investment firm VanEck has filed a formal request to list a bitcoin ETF, according to a June 5 filing with the U.S. Securities and Exchange Commission (SEC).
Bitcoin ETF Filing
VanEck has partnered with blockchain company SolidX to develop a new bitcoin-linked ETP that will provide investors with direct exposure to the volatile cryptocurrency. The new fund will be physically backed by bitcoin, which means it will hold actual units of the cryptocurrency instead of merely tracking its price through the derivatives market.
SolidX chief executive officer Daniel Gallancy told Bloomberg that “regulators are concerned right now about having an ETF that is available to retail investors,” but that the mood “will change over time.” In his view, now is the best time to push the conversation forward.
Jan van Eck referred to bitcoin as the new “digital gold” in a press release that circulated on Business Wire. The CEO of VanEck said the new bid goes above and beyond previous attempts to get bitcoin-based products approved by the SEC, which remains hesitant about exposing retail investors to the highly volatile asset class.
“A properly constructed physically-backed bitcoin ETF will be designed to provide exposure to the price of bitcoin, and an insurance component will help protect shareholders against the operational risks of sourcing and holding bitcoin,” he said.
Striking Out with the SEC
Since January, about a dozen applications to list bitcoin-based funds have been rejected by the SEC, with federal regulators appealing to investor protection and issues related to market manipulation, liquidity and the impact of forks on market prices. VanEck was among the several firms turned away by SEC regulators earlier this year.
The SEC maintains it is open to engaging sponsors in the development of these funds provided that the underlying issues are resolved. However, it’s not entirely clear what will convince regulators to grant the first bitcoin exchange-traded fund.
ETFs are viewed as the next frontier for digital currencies because of their low management fees, ease of access and broad diversification benefits.
While pure-play bitcoin ETFs may be off limits for now, the development of blockchain-based funds is growing at a rapid pace. Several blockchain funds have launched recently, including Amplify Transformational Data Sharing (BLOK), Reality Shares Nasdaq NexGen Economy (BLCN), First Trust Indxx Innovative Transaction & Process (LEGR) and Innovation Shares NextGen Protocol (KOIN).
There’s a growing belief on Wall Street and around the world that it is only a matter of time before we see the first bitcoin-backed ETF. The launch of bitcoin futures last December paved the way for mass innovation targeting institutional investors. The half-year slowdown in the cryptocurrency market has sparked a debate over whether institutional money will spark the next wave of adoption.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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