Written By: Isha Goel | August 12 2021
The investment firm VanEck filed a second prospectus with the U.S. Securities and Exchange Commission (SEC) on August 9 for a ‘Bitcoin strategy exchange-traded fund (ETF) with exposure to Bitcoin futures and other investment vehicles.’ The firm had unsuccessfully attempted to list a similar fund in 2017 and thus constructed a series of minor amendments that they hoped would pair with the greater maturity of the futures market to result in a more positive outcome this time around.
Credit for Image: Securities and Exchange Commission
More About the Fund
The ETF has been constructed in a manner to provide exposure to Bitcoin futures and other products that provide exposure to Bitcoin, possibly incusing crypto ETFs listed in other jurisdictions such as Canada. The fund is not meant to invest in Bitcoin or other digital assets directly, rather the investments will be made through a ‘Cayman Islands-based subsidiary of VanEck and managed by Gregory Krenzer.’ Gabor Gurbacs, the firm’s director of digital assets strategy stated that ‘VanEck was first to file for a Bitcoin futures ETF in 2017,’ and is ‘committed to bringing to market a Bitcoin ETF [because] futures markets have matured significantly since 2017.’ Meanwhile, the SEC hasn’t approved even one crypto ETF to date despite having received well over a dozen applications. In a turn of events, Chair Gary Gensler’s recent commentary indicates that futures products may be a consideration in the near future.
When VanEck initially filed for the Bitcoin Strategy ETF in August 2017, it was meant to be put in place as ‘one of a growing number of efforts to create financial products around the cryptocurrency that offer indirect exposure to investors.’ Unfortunately, they received a letter claiming that the firm’s request wouldn’t even be considered for review as a result of the nascent state of the derivatives market for cryptocurrencies like Bitcoin. The letter explained:
‘The Trust notes that on a call with the Staff on September 20, 2017, the Staff expressed the view that it is the Commission’s policy to not review a registration statement for a fund where the underlying instruments in which the fund intends to primarily invest are not yet available. The Staff requested that the Trust withdraw the Amendment until such time as the underlying instruments in which the Fund intends to primarily invest (i.e., bitcoin futures contracts) become available for investment.’
The Push For a Crypto ETF
Just last week, Atlanta-based asset manager Invesco submitted a proposal that was billed as providing exposure to Bitcoin through ‘investing in futures and other products such as ETFs listed outside the U.S.’ They continued to emphasize how the fund would not directly invest in Bitcoin and instead in its futures and exchange-traded products (ETPs) but also possibly Bitcoin ETFs listed outside of the United States. Remaining assets from the fund would be invested directly in cash and cash equivalents as a part of collateral investments ‘designed to provide liquidity, serve as margin or otherwise collateralize the subsidiary’s investments in Bitcoin futures.’ With more proposals coming out, there is hope that an ETF will soon be approved to provide a less risky entrance for investors into the world of crypto.
Combinedbitcoinstrategy, Securities and Exchange Commission, www.sec.gov/Archives/edgar/data/1137360/000113736021000495/combinedbitcoinstrategy.htm#ic18b1e5905764aabbf295c6200c766bf_19.
Crawley, Jamie. “Invesco Files WITH SEC for BITCOIN Strategy ETF.” CoinDesk, CoinDesk, 5 Aug. 2021, www.coindesk.com/invesco-files-with-sec-for-bitcoin-strategy-etf.
Crawley, Jamie. “VanEck Tries Again for BITCOIN Strategy ETF WITH SEC.” CoinDesk, CoinDesk, 10 Aug. 2021, www.coindesk.com/vaneck-tries-again-for-bitcoin-strategy-etf-with-sec.
DiCamillo, Nate. “Gensler’s Preference for Bitcoin Futures Products Is Likely Bad News for a Spot Bitcoin ETF.” CoinDesk, CoinDesk, 5 Aug. 2021, www.coindesk.com/genslers-preference-for-bitcoin-futures-products-is-likely-bad-news-for-a-spot-bitcoin-etf.
Higgins, Stan. “VanEck’s Bitcoin FUTURES ETF Effort Dealt Blow By SEC.” CoinDesk, CoinDesk, 29 Sept. 2017, www.coindesk.com/vanecks-bitcoin-futures-etf-effort-dealt-blow-sec.
Partz, Helen. “Invesco Files with SEC for Bitcoin ETF without DIRECT BTC Exposure.” Cointelegraph, Cointelegraph, 5 Aug. 2021, cointelegraph.com/news/invesco-files-with-sec-for-bitcoin-etf-without-direct-btc-exposure.