US asset manager VanEck is trying again with the US Securities and Exchange Commission (SEC) for a regulated bitcoin exchange-traded fund.
On this fourth attempt, the company is offering ‘VanEck Bitcoin Trust’ to trade on the Cboe BZX Exchange and basing the proposed fund on an index that draws data from large crypto exchanges.
VanEck filed with the US top watchdog for a regulated ETF that would track MVIS® CryptoCompare Bitcoin Benchmark Rate, which already serves as a reference rate for funds, asset managers and exchanges who wish to build financial products on bitcoin.
VanEck explains that the index aims to capture the total returns available to investors in the world’s largest crypto asset. The new ETF differs from previously-filed similar proposals in that it will safeguard Bitcoin holdings with a regulated third-party custodian and as the index draws prices from a large number of cryptocurrency exchanges.
The statement further reads
“In seeking to achieve its investment objective, the Trust will hold bitcoin and will value its Shares daily based on the reported MVIS® CryptoCompare Bitcoin Benchmark Rate, which is calculated based on prices contributed by exchanges that the Sponsor’s (as defined below) affiliate, MV Index Solutions GmbH (“MVIS”), believes represent the top five bitcoin exchanges based on the industry leading CryptoCompare Exchange Benchmark review report. VanEck Digital Assets, LLC (the “Sponsor”) is the sponsor of the Trust, Delaware Trust Company (the “Trustee”) is the trustee of the Trust, and [ ] (the “Bitcoin Custodian”) is the custodian of the Trust, who will hold all of the Trust’s bitcoin on the Trust’s behalf.”
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If eventually went live, the bitcoin ETF shares won’t be offered to retail investors but would help qualified institutional players to get exposure to cryptocurrencies without having to deal with exchanges that often struggle with lack of public trust.
VanEck has applied before for a physically-backed exchange-traded product. The first time was in collaboration with blockchain technology company SolidX. Some had argued that the proposal from New York-based VanEck, the ninth biggest ETF provider, was more likely to gain approval thanks to plans for a high minimum share price that would discourage retail investors.
Their collective offering, however, was foiled several times as the SEC cited fears of market manipulation.
In their last attempt, VanEck and its partners tried to get around the regulatory rejection through employing Rule 144A, which provides a safe harbor from the SEC’s registration requirements. Specifically, this rule was introduced in 2012 to exempt the privately placed securities from registration restrictions, but the shares, in this case, can be sold only to ‘qualified institutional buyers’ and with shorter holding periods.