In pursuit of gaining approval for a Bitcoin exchange-traded fund (ETF) from the U.S. Securities and Exchange Commission (SEC), VanEck, a New York-based asset manager, has resubmitted an updated application. This application showcases an innovative approach to fund seeding that distinguishes it from other contenders in the spot Bitcoin ETF market.
VanEck faced setbacks earlier, 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 aligns with a broader trend where the SEC has consistently turned down multiple ETFs for digital assets, expressing concerns about potential market manipulation.
Novel Seeding Strategy
VanEck’s latest application deviates from traditional spot Bitcoin ETF concepts. The company’s financial attorney, Scott Johnsson, highlighted a shift in the seeding strategy. VanEck intends to use Bitcoin itself for seeding instead of the conventional cash-based approach.
In its updated application, VanEck outlined the objective of its Bitcoin Trust to mirror the same after-cost performance as Bitcoin. This led to the decision to store Bitcoin instead of cash. The program introduces an innovative funding seeding method, where the trust will issue or redeem shares in “Creation Baskets,” each comprising 50,000 shares with values determined in Bitcoin terms. The trust’s administrator will then use this calculation to establish the minimum cash subscription amount.
Growing Competition and Regulatory Progress
VanEck’s decision to overhaul its ETF application coincides with several 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 these updates signal positive advancements in negotiations between asset managers and regulators. The market eagerly anticipates the SEC’s forthcoming decisions on these pending ETF proposals.
Expanding Horizons
Besides its focus on Bitcoin, VanEck is broadening its presence in the cryptocurrency market. The company is on the brink of introducing futures contracts based on Ethereum, pending regulatory approval from the SEC. The proposed Ether Futures Exchange Traded Fund (ETF) will offer standardized products with cash-settled futures contracts, enabling trading on a platform regulated by the Commodity Futures Trading Commission.
VanEck’s Bullish Forecast for Solana
VanEck forecasts a substantial price surge for Solana’s native token, SOL, in the coming years, projecting a significant increase based on Solana’s potential to host the world’s first dApp with a user base surpassing 100 million. The model predicts SOL’s price to reach $335 by 2030, with an optimistic scenario suggesting a staggering price of $3,211 per token. However, the realization of this forecast relies on Solana attaining “Ethereum-like dominance” in the market for on-chain transactions.
Companies, including VanEck, are modifying their spot Bitcoin ETF applications in response to regulatory scrutiny. Bitwise Asset Management, BlackRock, ARK Invest, and 21Shares have all made adjustments, aiming to address concerns raised by regulators.
Spot Bitcoin ETFs allow investors to trade and invest in Bitcoin without holding the cryptocurrency. These ETFs differ from futures-based ETFs and are more appealing to institutional investors seeking to replicate the performance of the Bitcoin spot market.
However, SEC concerns regarding market manipulation, investor protection, and regulatory monitoring have led to routine delays or denials of spot Bitcoin ETFs.
