VanEck Resubmits Bitcoin ETF Application with Innovative Seeding Strategy
In a bid to secure approval for a Bitcoin exchange-traded fund (ETF) from the U.S. Securities and Exchange Commission (SEC), New York-based asset manager VanEck has resubmitted an updated application, revealing a distinctive approach to fund seeding that sets it apart from other applicants in the spot Bitcoin ETF market.
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This move follows VanEck’s earlier setbacks, notably on March 10, when the SEC denied the company’s request for the third time to list and trade shares of its Bitcoin Trust. This denial reflects a broader trend where the SEC has repeatedly rejected multiple ETFs for digital assets, citing concerns about potential market manipulation.
Novel Seeding Strategy
Notably, VanEck’s latest application marks a departure from conventional spot Bitcoin ETF concepts. The company’s financial attorney, Scott Johnsson, emphasised the shift in the seeding strategy, indicating VanEck’s intention to utilise Bitcoin itself for seeding, as opposed to the conventional cash-based approach.
In its updated application, VanEck outlined the objective of its Bitcoin Trust to achieve the same after-cost performance as Bitcoin, leading to the decision to store Bitcoin rather than cash. The program introduces a pioneering method of funding seeding, wherein the trust will issue or redeem shares in “Creation Baskets,” comprising 50,000 shares each, with values determined in Bitcoin terms. The trust’s administrator will then use this calculation to establish the minimum cash subscription amount.
Increasing Competition and Signs of Regulatory Progress
VanEck’s decision to revamp its ETF application coincides with a flurry of revised applications in the spot Bitcoin ETF arena. Notable competitors such as Bitwise Asset Management, ARK Invest, and 21Shares have also updated their applications, addressing the SEC’s concerns regarding custody and asset valuation. Analysts suggest that these updates indicate positive advancements in negotiations between asset managers and regulators. Market participants eagerly anticipate the SEC’s forthcoming decisions on these pending ETF proposals.
Apart from its focus on Bitcoin, VanEck is expanding its foothold in the cryptocurrency market. The company is on the verge of introducing futures contracts based on Ethereum, pending regulatory approval from the SEC. The proposed Ether Futures Exchange Traded Fund (ETF) will offer standardised products with cash-settled futures contracts, enabling trading on a platform regulated by the Commodity Futures Trading Commission.
VanEck’s Bullish Forecast for Solana Points to 10,000% Price Increase
In a separate analysis, VanEck projects an exponential price surge for Solana’s native token, SOL, in the coming years. The forecast is based on the belief that Solana, rather than Ethereum, will become the host of the world’s first dApp with a user base exceeding 100 million. VanEck’s model predicts SOL’s price to hit $335 by 2030, with an optimistic scenario suggesting a staggering price of $3,211 per token. However, the realisation of this bullish forecast relies on Solana attaining “Ethereum-like dominance” in the market for on-chain transactions.
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Companies other than VanEck are also changing their spot Bitcoin ETF applications in response to regulatory scrutiny. At the end of September, Bitwise Asset Management submitted a supplement to its Bitcoin ETF application, which included new reasons that, in the firm’s view, undermine the rationale that regulators had given for denying the product to American investors. BlackRock was the first to file a modified prospectus for a spot Bitcoin ETF, followed by ARK Invest and 21Shares this month, which submitted an amended application for their planned Bitcoin ETF.
Spot Bitcoin ETFs are an exchange-traded fund that enables investors to trade and invest in Bitcoin without actually holding any of the cryptocurrency. These ETFs are separate from futures-based ETFs, which get their value from contracts to buy and sell Bitcoin in the future. Spot Bitcoin ETFs are more appealing to institutional investors since they attempt to replicate the performance of the Bitcoin spot market.
Spot Bitcoin ETFs have been routinely delayed or denied by the SEC because of concerns concerning market manipulation, investor protection, and regulatory monitoring.