The US Securities Exchange Commission (SEC) will soon make a decision on whether to approve the VanEck Bitcoin Exchange Traded Fund (ETF).
If approved, the VanEck Bitcoin ETF will be the world’s first cryptocurrency ETF to trade on a regulated exchange.
Nine crypto ETFs have been rejected by the SEC in this year, but VanEck’s case is different and arguably more compelling.
The New York investment management firm has been regularly meeting with SEC staff and is extremely confident it can win over the SEC.
“VanEck has a 60+ years relationship with the regulators, and we speak regularly with the regulators,” said VanEck Director of Digital Assets Strategy Gabor Gurbacs in an interview this month on CNBC Africa.
He outlined the following four reasons why he believes the VanEck ETF will be approved:
1) It’s a physical Bitcoin ETF. This means the underlying Bitcoin is actually purchased. Other crypto ETF proposals have been derivative based – meaning instruments such as Bitcoin options and futures are traded instead of the purchasing of Bitcoin.
2) It’s fully insured against thefts, hacks or losses.
3) The ETF’s Bitcoin pricing comes from VanEck’s fully regulated entity, MVIS Indices.
4) The ETF is institutionally oriented with 25 Bitcoin per basket.
ETF could attract ‘billions’
In the same interview Gabor Gurbace predicted the Bitcoin ETF, if approved, will attract around US$1 billion in investments within days of trading.
The investment flowing from institutional investors, who do not want to take risks by investing in bitcoin through less secure and safe spot markets.
“Our gold ETFs are already in a few billion dollars range,” said Gurbacs.
“I wouldn’t be surprised if a Bitcoin ETF gets in a few billion dollars range.”
VanEck’s link to Swiss ETP approval
In November, Europe’s fourth largest stock exchange, the SIX Swiss Exchange, approved the listing of the Amun Crypto Exchange Traded Product (ETP).
The ETP tracks the Amun Crypto Basket Index (HODL5) which is based on the performance of the top five cryptocurrencies.
Although the listed investment is officially labelled an ETP, it operates similarly to an ETF.
When a buyer purchases the ETP, a market maker buys the underlying cryptocurrency based on the HODL5 index allocation.
The Amun Crypto Basket Index is maintained by VanEck’s MVIS Indices.
As mentioned earlier in this article, the VanEck’s Bitcoin ETF, will use MVIS Indices to price its underlying Bitcoin.
Many observers believe this European ETP approval will bode well for VanEck’s ETF application.
THE DATES TO WATCH:
29/12/18 – First Deadline:
SEC will either approval, reject or delay.
27/02/19 – Final Deadline:
If SEC chooses to delay, February 27, 2019 will then be the final deadline by which commissioners must either approve or reject.