RT @AlastairJMarsh: So it’s not an ETF as it’s not traded on an exchange and it’s targeted at qualified institutional buyers only. Question is will it be a meaningful access product for institutional investors? https://t.co/tBCG5NWMXw@WSJ
Crypto enthusiasts have been trying without much success to get regulatory approval for funds to bring bitcoin to investors. Two firms plan to use a workaround.
Van Eck Securities Corp. and SolidX Management LLC on Thursday plan to start selling shares in a limited version of a crypto exchange-traded fund. The companies are employing a rule that will exempt the shares from securities registration, but the shares can be sold only to certain institutional buyers.
The move is the latest attempt by players within the cryptocurrency sector to create a bitcoin-based investment asset in hopes of attracting money from mainstream investors. Though bitcoin has become part of pop culture in the nearly 11 years since it was created, the markets for trading it remain immature and largely unregulated, which has kept many potential investors out. The Securities and Exchange Commission has so far rejected every attempt to sell a bitcoin ETF.
The SEC declined to comment. The agency has previously raised concerns that there aren’t enough protections against fraud and market manipulations in the crypto market.
The VanEck SolidX Bitcoin Trust shares would be sold under the SEC’s Rule 144A, which allows for the sale of privately placed securities to “qualified institutional buyers.”
That means they would be available only to institutions such as hedge funds, brokers and banks. They wouldn’t be open to retail investors or individual buyers.
The firms first jointly applied for a bitcoin ETF in 2018 and said they still expect eventual approval. Van Eck and SolidX said they hope this limited version will act as a proof that a bitcoin ETF can work.
It is an unusual arrangement. Anna Pinedo, a partner at Mayer Brown’s New York office, who isn’t involved in the fund, said she had never heard of a firm offering shares under Rule 144A and then seeking SEC approval for a retail offering.
ETFs have grown into a $3.9 trillion market, according to research firm XTF. They give investors easy access to stocks and bonds, but also some exotic markets, such as commodities and derivatives, and high-risk strategies, in which retail investors may not understand the dangers.
It isn’t clear how much demand there would be for a bitcoin ETF, after the brutal selloff in 2018 appeared to wipe out both retail and institutional interest. Still, there is a potentially large first-mover advantage for the firm that can get a bitcoin ETF approved.
While any investor can buy cryptocurrency, it can be daunting for people not familiar with it. Crypto enthusiasts believe that an ETF would make it simpler for investors to get exposure to the sector.
But your title read Bitcoin ETF, there's no such thing. Its **crypto ETF** and as far as I read this, they've created a circlejerk that other people can bet money on, again, detached from securities regulatory norms, that then for me, reads as another pyramid scheme, at least for now.
In essence, everything thats tied to a blockchains et al. is gonna become part of a basket of sorts, its the groupon idea laying eggs in the crypto scene.
AFAIK this "ETF" is a basket of several cryptos (its unregulated business, they can put 5, 10, 20 coins there, who knows). It brings an understanding of the financial market that the ETF should bring good return if well managed, but again, AFAIK, 10 year old cyptos are just catching up with Libra whitepaper (and other documents that predate Libra regarding this kind of operation).
CockatielGold | QC: CC 81, NANO 19, TraderSubs 224 months ago