VanEck, a prominent contender in the race to launch a Bitcoin Exchange-Traded Fund [ETF], has submitted a revised application to the United States Securities and Exchange Commission [SEC]. This updated application for a spot BTC ETF contains crucial details about a financial transaction involving a substantial block of 50,000 shares of the proposed ETF. Notably, a seed capital investor utilized BTC as the currency for this purchase.
In the realm of ETFs, creation baskets represent bundles of shares that authorized participants, often large fintech companies, exchange with the ETF issuer in return for ETF shares. These creation baskets play a vital role in the creation, issuance, and redemption of ETF shares, streamlining the process for investors and institutions alike.
A key factor in this scenario is the Market Vector Bitcoin Benchmark Rate, an index serving as a reference price for BTC. This benchmark provides a standardized value for Bitcoin at specific points in time, enabling investors to assess the cryptocurrency’s market worth accurately. Notably, legal experts, including finance lawyer Scott Johnsson, have pointed out the uniqueness of VanEck’s fund-seeding approach. Unlike other proposals relying on cash, VanEck’s method involves seeding the fund with BTC directly, a distinctive feature that sets it apart in the spot Bitcoin ETF landscape.
Bitcoin ETFs Race
This particular ETF, unlike conventional ones that invest in BTC futures, would directly invest in the actual cryptocurrency. Industry insiders anticipate that this direct investment approach is likely to attract significant capital from investors seeking exposure to Bitcoin through established asset management channels. VanEck’s recent application places it in the company of other asset management giants like Bitwise Asset Management and Ark Invest, all of whom are updating their applications for spot Bitcoin ETFs.
These revisions stem from the SEC’s previous objections to similar products. For instance, Ark Invest, led by Cathie Wood, recently made substantial changes to its spot Bitcoin ETF proposal to address the SEC’s concerns about Coinbase’s custodial practices. The modifications outlined the segregation of the trust’s assets, emphasizing their storage in separate accounts on the Bitcoin blockchain, commonly known as “wallets,” ensuring they remain distinct from corporate or other customer assets.
Eric Balchunas, a senior ETF analyst at Bloomberg, commended Ark Invest for these crucial clarifications and its ongoing dialogue with the SEC. While immediate approval might not be imminent, experts view these developments as positive strides toward eventual acceptance. Balchunas highlighted the ongoing discussions between issuers and the SEC as a promising sign, indicating progress despite the likelihood of further iterations to address essential details.