VanEck, a New York-based investment management firm, has been completely engrossed in a proposed bitcoin exchange-traded fund (ETF). Having no competitors at all, the company’s proposal has been assessed by some experts to have the best shot of being approved by the U.S. Securities and Exchange Commission (SEC).
No wonder the SEC is currently at the center of attention, in the wake of its comment period: Is it a Yes or a No – or maybe a further delay – all answers will be provided on Friday.
Even so, Gabor Gurbacs, director of the digital asset strategy at VanEck, is a bit leery about what to expect from the SEC in the upcoming months:
“I wish I knew the answer to your $1 billion question. Seriously.”
This is how Gurbacs replied to the typical question of “What do you think the outcome would be”.
He then added: “Unfortunately, I don’t know the answer. I do know that we have addressed market structure issues and this is a chance for regulators to bring bitcoin under existing frameworks and protect investors.”
And further clarified: Still, if the measure fails, it won’t be for a lack of effort.
As a matter of fact, VanEck’s specific proposal came about nearly three years ago when SolidX, a financial technology company also headquartered in New York, first initiated this whole trend of bringing a bitcoin ETF to market.
Later on, both companies partnered and had it announced in early June, increasing the chances of approval. And it’s not just crypto investors who are supporting the concept, but also economists, CEOs, financial analysts and even one SEC commissioner herself (except that she is for a different bitcoin ETF proposal).
So, what makes the VanEck-SolidX bitcoin ETF unique?
Simply put, it’s different from any past efforts such as the recently rejected Winklevoss ETF.
As Gurbacs explained, “it is an insured product.” As such, the physical bitcoins backing ETF shares would be covered in case of “theft and hacks and losses of all sorts.”
This, however, isn’t the selling argument for VanEck and SolidX, it is actually the unique and quite ingenious solution they both bring: they’re designed to cut non-accredited investors.
“When you launch a new fund, you can arbitrarily set the initial N.A.V. and the initial trade price where you want and they come in around $20, $25…What they’ve done, they’ve announced that they’re going to set the price to $200,000, which means you can’t buy a fractional share. It means the minimum notional amount that an investor can put into the bitcoin fund is going to be $200,000, which means that by definition anybody who’s trading the fund is an accredited investor.” explains Phil Bak, a former managing director at the New York Stock Exchange and current CEO of Exponential ETFs.
Others see the ETF as a possible path to future products around crypto, including Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.
Balchunas thinks of the institutionally-geared VanEck-SolidX ETF as the “bridge between not approving and approving an actual regular primetime-ready ETF with a share price that looks more normal,” adding that this is one of the primary reasons why the SEC might consider the prospect of approving it as a “baby step towards a real ETF.”
Approved or not, the appending decision of the SEC will not hinder the combined efforts of VanEck and SolidX to pursue the institutionalization of bitcoin trading.