Despite difficulty for many years, the crypto community has long been seeking approval for a Bitcoin ETF. That in mind, CNBC’s Bob Pisani spoke with VanEck CEO Jan Van Eck during an “ETF Edge” segment about a “Bitcoin-like ETF” that may help bridge the gap between investing and the world of crypto.
As Van Eck explains, despite jokingly stating he’s not sure why he’s on an ETF show, his product will only be available to institutional investors. This product is named the VanEck SolidX Bitcoin Trust 144A Shares. Van Eck is referring to it as a broker-traded fund or BTC, because it will trade over the counter, but not the NYSE.
How VanEck’s “Bitcoin-like ETF” Works
“The good news is, an institution has the convenience of buying it in their brokerage account, with the tax reporting, and they can redeem at an AV at the end of every day,” Van Eck notes.
Conceptually, this product has to be an institution or have $100 million behind it, meaning any individual, no matter how rich, cannot buy it. There has to be an institution, such as a corporation or a bank; let alone a hedge fund, mutual fund, or even a larger ETF company.
As Pisani clarifies, it is possible to set up an ETF and buy into this trust, though one would not be able to sell it to the public, so “It’s not a backdoor way to get into the ETF business,” as stated by Pisani.
When asked how much of this trust would be available to the public, Van Eck explains how they are not trying to directly or indirectly sell to retail. However, he notes how the big exchanges in the crypto world are entirely unregulated, while the traditional world has tried to stay out of it entirely.
“There’s two worlds that are completely separated, and we’re trying to do a little bit of an overlap, and we’ll see if it works,” Van Eck adds.
The Main Bitcoin Concerns
Pisani goes on to ask about a real Bitcoin ETF coming into play, pointing out the two significant concerns, custody and exchanges as far as who is responsible and how can manipulation be stopped. In regards to that progress, Van Eck states how there has been considerable progress, such as the price for his BTC, which comes from three US-based, over the counter brokers.
The point being that any shady behavior can be spotted, as those involved, at least on this level, are regulated regularly. “I don’t know what the SEC is worried about,” Van Eck adds.
Moving to Chris Hempstead, former head of ETF sales at Deutsche Bank, he believes this is a step in the right direction. It could be a proof of concept that could help show the SEC and the regulators the potential of an actual Bitcoin ETF. As Hempstead points out, it may even lead to retail being able to have access.
Van Eck steps into to add why people would be interested in buying Bitcoin, pointing out the trend of reacceleration of a lot of the debt markets in the world offering negative interest rates. With that, it could be a matter of the European central banks not knowing if they can use all of their tools. So, in a low-interest environment, they want either gold or Bitcoin.
Addressing once again whether or not the SEC could realistically move to approve a Bitcoin ETF, Hempstead jumps into to note the concern is whether or not they consider it safe. With that in mind, he points out, “The same questions were brought up for physical and precious metals back when those ETFs were launched.”
Pisani agrees, concluding how he does believe it will happen eventually, once the SEC and the regulators manage to agree on a safe way to do it.
Watch Van Eck Talk About This Bitcoin-Like ETF:
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