Will VanEck Bitcoin Trust be a crypto game changer? Opinions are mixed


Financial news media channels were abuzz a few days back when VanEck Securities and SolidX Management surprised the world by announcing the immediate offering of a “Bitcoin-like ETF”, but only available to institutional investors that qualified as being “Sophisticated” and “Accredited” under SEC guidelines. It seems that Rule 144A of the 1933 Securities Act provided an exception, whereby the partnership could act on a limited basis, while it still waited for a decision from the SEC on its BTC ETF request. For the record, analysts attribute Bitcoin’s recent $700 rise to this announcement.

The dust has settled a bit after this announcement, time enough for crypto and investment industry observers to form an opinion, as to whether the fund will really make a difference in Crypto-Land. Opinions had been mixed at the outset, and now, after a few days, not that much has changed. Shares are available in the OTC markets on a restricted basis, but until we get a status report from VanEck, the marketing arm of the newly formed Bitcoin Trust, in, perhaps, a month, we can only speculate if the fund flows will be spectacular or just ho-hum.

Shares for the VanEck and SolidX Bitcoin Trust went on sale yesterday, the 5th of September. If you qualified, you could purchase them “on the OTC Link ATS, an alternative trading system directly regulated by the U.S. Securities and Exchange Commission.” SolidX will be the sponsor the trust, while the marketing responsibilities will be handled by VanEck Securities. BNY Mellon has been designated to handle settlements, transfers, accounting, and other administrative matters.

Bloomberg interviewed principal executives connected with the launch and obtained these positive remarks:

Ed Lopez, head of the ETF Product at VanEck:

There continues to be steady demand from institutional investors seeking access to a cleared product that offers the price return of Bitcoin. We believe this offering solves issues associated with direct Bitcoin investments.

Daniel H. Gallancy, the CEO of SolidX:

We are in the midst of a sea change for institutions, for the Bitcoin ecosystem and for how market participants define an ETF. The launch welcomes an entirely new class of investors to the table, promoting the maturation of the Bitcoin market.

Aside from the obligatory favorable remarks from insiders, opinions across the industry were a combination of good, so-so, and let’s wait and see. Here are a few of the more significant ones for the record:

  • Alex Krüger, a widely quoted economist and trader, told CCN: “Van Eck, maybe tired of waiting for the SEC to approve a bitcoin ETF, are launching their version of Grayscale’s Bitcoin Investment Trust, which is a trust that holds bitcoin and trades in US OTC Markets under ticker $GBTC. Not an ETF. Key difference: Van Eck’s to allow for continuous, open-end creation/redemption of shares allowing price to track Net Asset Value (NAV) closely … GBTC does not and thus often trades at a premium.”
  • Jake Chervinsky, general counsel for Compound, a crypto loan company, stated to QZ.com: “The benefits of an ETF (liquidity, price discovery, transparency, investor protections, etc.) depend on a major exchange listing + the structure and requirements that go along with formal ETF approval. Private investment trusts are fine, but don’t provide the benefits of an ETF.”

In the midst of these soft critiques, Jan van Eck, CEO of his namesake, explained to Investing.com that:

Institutional demand for Bitcoin exposure is uncertain, because institutional quality vehicles simply have not, to this point, been readily available. We’re introducing a solution for institutions that fits within their operational processes and the current regulatory framework.

VanEck’s “workaround” may not be a true ETF, thereby opening the doors for access from the mainstream of the investing community, but, as some have pointed out, it does appeal to a broader set of institutional players than does the Grayscale trust. The Grayscale experience has also not been shabby by any means – over $2.7 billion in assets are now under management, and returns for 2019 exceed 200%. Will the VanEck fund draw as much or more? They have “built it”, now let’s see who comes.

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