VanEck is moving to address the Securities and Exchange Commission’s (SEC) concerns regarding bitcoin exchange traded funds, the latest step by the ETF sponsor to bring a bitcoin fund to market.
In June, ETF sponsors VanEck and SolidX, a fintech company engaged in the bitcoin ecosystem, revealed plans for the VanEck SolidX Bitcoin Trust ETF (XBTC). That fund is targeted at institutional investors as it would debut with a share price of $200,000. That product would track an index linked to a group of bitcoin trading desks, possibly allaying some of the SEC’s prior concerns about funds linked to physical bitcoin.
“The SEC had previously rejected the possibility of allowing ETFs from both companies in 2017, telling VanEck via a Staff Letter in January this year that various ‘questions” needed answering ‘satisfactorily’ before it would be ‘appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products,’” reports Bitcoinist.
A recent letter from VanEck to the SEC addressed some issues, including the use of futures and market liquidity. Bitcoin futures debuted on the Chicago Board Options Exchange (CBOE) in December with CME Group following suit just a few days later.
Nasdaq Inc. is still considering entering the bitcoin futures competition. Market observers previously expected Nasdaq to launch futures on the digital currency this year. The exchange operator has previously said that if it moves forward with bitcoin futures, its product will be different from those offered by Cboe and CME.
Bitcoin ETF to Reduce Potential Manipulation
“Given the proposed ETF’s regulation under the Securities Act of 1933 and 1940 Act and the fact that it offers exposure via regulated and surveilled bitcoin futures, we reasonably expect the proposed ETF to reduce potential manipulation and operational risk associated with a bitcoin investment product,” said VanEck in the letter.
The issuer also believes its effort to launch a bitcoin ETF via an investment structure that is already regulated (ETFs) is consistent with the SEC’s objective of protecting investors.
“By offering investors exposure to bitcoin through a regulated investment product, we believe the proposed ETF will be consistent with the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation,” according to the letter.
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