For years, regulators have quashed hopes of a bitcoin ETF, citing worries about everything from market volatility and industry manipulation to thin liquidity.
Just like Bitcoin itself, issuers keep fighting back.
VanEck has started a new push to launch an ETF tracking the world’s largest digital currency, according to an SEC filing. The VanEck Bitcoin Trust would reflect the performance of the MVIS CryptoCompare Bitcoin Benchmark Rate.
It’s a bold move for the New York-based firm. There have been multiple applications for crypto-tracking ETFs over the years, and the SEC has denied them all.
VanEck may be betting that a change in SEC leadership — with Jay Clayton stepping down as chairman — combined with bitcoin’s growing adoption on Wall Street have improved the odds of regulatory approval, according to analysts.
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Potential customers include hedge funds, crypto miners and over-the-counter trading desks
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The fund would provide broad-based exposure to four commodity sectors through futures contracts, according to the filing.
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The agency has long urged issuers to address risks and concerns associated with a potential crypto fund, including manipulation, liquidity and custody issues.
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“All indications from the SEC are that a bitcoin ETF still faces an uphill battle,” said Nate Geraci, president of the ETF Store, an investment advisory firm. “That VanEck has the confidence to file for a bitcoin ETF might indicate some shifting viewpoints within the SEC. Clearly, a key to watch as this drama continues unfolding is who President Biden taps as SEC chair.”
VanEck’s filing comes in a week when bitcoin has continued to set record highs. The world’s largest digital asset advanced about 300% last year, catching the attention of some of Wall Street’s most famous investors, including Paul Tudor Jones, as well as mainstay firms like PayPal.
While crypto fans see its rally continuing, many are also aware its high-profile surge could attract greater scrutiny. The new SEC chair may take a softer line than Clayton, but President-elect Joe Biden has nominated Janet Yellen as Treasury secretary. In the past she has described bitcoin as a “highly speculative asset” and “not a stable store of value.”
“By filing now, it will restart the clock for a review when there will be new SEC membership and leadership,” said Todd Rosenbluth, director of ETF research for CFRA Research. “However, I think the SEC has made it clear they have concerns that need to be overcome.”
According to the filing, VanEck’s ETF plans to hold bitcoin and will value its shares based on prices contributed by exchanges that MV Index Solutions GmbH believes represent the top five exchanges for the cryptocurrency.
Such an ETF “could be taken as bullish for bitcoin because it does broaden the universe of investors who could be aware of bitcoin,” said Everett Millman, finance expert with Gainesville Coins.
