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A legacy U.S. firm just filed for a Bitcoin ETF with the SEC…again

A legacy U.S. firm just filed for a Bitcoin ETF with the SEC…again

Photo by Lloyd Blunk on Unsplash

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This post was last updated on January 1st, 2021 at 01:03 pm

Regulators have long shunned Bitcoin ETFs in the US, but that’s not stopping firms from trying their luck repeatedly.

VanEck makes Bitcoin ETF move

VanEck, a New York-based investment management firm founded in 1955, has filed for a Bitcoin exchange-traded fund with the US Securities and Exchange Commission, as per a filing released Wednesday.

The ETF would trade on the Cboe BZX Exchange, similar to previously proposed Bitcoin ETFs by VanEck.

ETFs are financial instruments traded on regulated, public markets that allow investors to trade, scalp, or invest in niche, leveraged, or “riskier” assets. They are among the most liquid markets in the world.

As per the proposal, VanEck would hold an underlying amount of Bitcoin via a custodian for each “share” issued on the CBOE. This means clients are not directly buying spot Bitcoin, but instead speculating on the asset’s financial performance.

“Barring a liquidation or extraordinary circumstances, the Trust does not intend on purchasing or selling bitcoin directly, although the Trustee may direct the Bitcoin Custodian to sell bitcoin to pay certain expenses,” VanEck said.

The firm has pushed for the proposed “VanEck Bitcoin Fund,” the Bitcoin ETF, for a long time. It joins the ranks of other traditional players like Wilshere Phoenix in offering such an instrument for US investors.

The filing is the firm’s third application for a Bitcoin ETF. The previous was withdrawn by the firm in September 2019, and the first was withdrawn in January 2019 after a period of inactivity and supposed regulatory inaction to approve such a service.

Grayscale’s performance

VanEck’s Bitcoin ETF filing comes close on the heels of the impressive market performance of Grayscale’s crypto funds, specifically its Bitcoin fund, the GBTC.

Sold over-the-counter, the instrument is currently one of the only ways for US accredited investors to gain exposure (in a legal, regulated manner) to Bitcoin. It currently holds over $17 billion worth of the asset as part of the offering, as per the latest data.

GBTC has boomed unlike anything this year. The fund has attracted billions of dollars from institutional managers and stores all its Bitcoin with Coinbase. As such, some investors, like Harris Kupperman of Praetorian Capital, say the fund’s activity is the reason why Bitcoin prices have surged upwards to $29,000 this year, apart from the retail frenzy.

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