VanEck and SolidX to Use U.S. SEC Exemption Rule to Offer Limited Bitcoin ETF

September 4, 2019 at 11:23 am This article is more than 4 years old

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VanEck Securities and SolidX Management have come out with a plan to offer their bitcoin exchange-traded fund (ETF). According to a report by the Wall Street Journal on September 3, 2019, the companies intend to offer a limited bitcoin ETF, using the exemption rule provided by the U.S. Securities and Exchange Commission (SEC).

Limited Bitcoin ETF

Investment management firm, VanEck, and fintech company, SolidX, would begin sale of their limited bitcoin trust on Thursday, September 5, 2019. Using the U.S. SEC’s Rule 144A, the firms would circumvent regulatory hurdles provided by the American financial watchdog.

The use of Rule 144A would mean that the limited shares of the VanEck Solid X bitcoin Trust would be available only to certain institutional investors, such as banks, hedge funds, and brokers, as retail investors are exempted.

Commenting on the recent development, CEO of VanEck, Jan van Eck in a press release, said:

“Institutional demand for bitcoin exposure is uncertain, because institutional quality vehicles simply have not, to this point, been readily available. We’re introducing a solution for institutions that fits within their operational processes and the current regulatory framework.”

However, Jeff Chevinsky stated via a tweet, that what VanEck and SolidX Bitcoin Trust wasn’t a proper ETF.

This is misleading. The VanEck SolidX Bitcoin Trust is *not* an ETF. It looks exactly like the Grayscale Bitcoin Trust, which was launched almost six years ago. Calling this a "limited ETF" is a cute marketing strategy, but that's about it. Calling it a full ETF is just wrong. https://t.co/e5kyeAE4gC

— Jake Chervinsky (@jchervinsky) September 3, 2019

In addition to offering limited shares to qualified institutional investors, these investors are protected against theft or loss of the bitcoin private keys. Although the SEC hasn’t said anything official on the matter, the firms believe that offering the limited version would confirm that a bitcoin ETF is possible.

Bitcoin ETF: An Over-Flogged Horse?

The United States SEC has continued to drag its feet concerning its approval of a bitcoin ETF. Part of the reasons for the delay includes an unregulated cryptocurrency industry, market manipulation, and liquidity issues.

Back in June 2018, VanEck and SolidX came together to launch a bitcoin ETF. A month after the launch, the pair filed with the U.S. SEC for a physically-backed bitcoin ETF. In August 2018, the U.S. SEC first delayed its decision to approve or disapprove a bitcoin ETF from VanEck and SolidX, till September 2018.

Even with 99 percent of the public voting in favor of a bitcoin ETF, the American watchdog yet again delayed its decision. Another postponement happened in December 2018, with the SEC setting the deadline for February 2019.

Following the withdrawal of the bitcoin ETF application in January 2019, VanEck, along with CBOE, reapplied within the same month.

In March 2019, BTCManager reported that the U.S. SEC postponed its decision on VanEck/SolidX and Bitwise bitcoin ETF applications, repeating the process in May and August 2019. At the time of writing, the SEC has not approved a single bitcoin ETF application. Proponents of the bitcoin ETF and observers wait patiently for the day the SEC would finally make up its mind.