VanEck SolidX’s Bitcoin ETF is “Not an ETF”, Just Another Bitcoin Trust like Grayscale’s GBTC

  • Bullish but not a game changer
  • VanEck SolidX to sell their shares to “qualified institutional buyers,”
  • “Calling this a “limited ETF” is a cute marketing strategy, Calling it a full ETF is just wrong”
  • Another Grayscale, why does the market need it?

Investment firm VanEck and financial technology company SolidX Management LLC in its latest move to attract institutional money into the crypto industry will sell shares in their Bitcoin trust to “qualified institutional buyers,” the company announced on Tuesday.

These shares, under the VanEck SolidX Bitcoin Trust, will provide access to a physically backed Bitcoin product tradeable via prime and traditional brokerage accounts.

Bitcoin ETF, Limited Bitcoin ETF or Just Another Grayscale-like BTC Product?

Commentators are calling them Bitcoin ETF or limited Bitcoin ETF. However, “This is misleading,” said Jake Chervinksy, general counsel at Compound Finance.

“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,” he added.

VanEck and SolidX together with Cboe filed a proposal for Bitcoin-based ETF with the US regulators. The decision on that has been delayed.

Economist and trader, Alex Kruger also points out, after getting tired of waiting for the SEC approval, VanEck launched their version of Grayscale’s Bitcoin Investment trust.

The key difference between both is that VanEck allows for open-ended creation and redemption of shares allowing the price to track Net asset Value (NAV) while GBTC does not, as such offers trade at a premium.

In April this year, GBTC was trading at a premium of as high as 47% and is still above 25%. VanEck, meanwhile has insurance cost at 0.9% of NAV. This is certainly bullish but not a game changer, says Kruger.

What’s Even the Point?

The Bitcoin-based asset is similar to an exchange-traded fund (ETF) in the matter that the shares can be created and redeemed like ETFs but “is not an ETF,” said Ed Lopex, head of ETF Product for VanEck. Also,

“Unlike an ETF it isn’t listed on a national exchange, rather it is quoted on the OTC Link ATS platform.”

An ATS — that matches orders for buyers and sellers — is not a national securities exchange, but can apply to the SEC to become one. The idea behind introducing this for institutions, Jan van Eck, CEO at VanEck says is to provide a product that “fits within their operational processes and the current regulatory framework.”

Interestingly, this month Bakkt is also launching physically delivered daily and monthly bitcoin futures.

“Why have they not thought of this before?” questions trader CryptoISO. “Another Grayscale…why does the mkt need it? The whole hope of the ETF was to include retail. There are institutional products already and Bakkt is “launching” later this month.”

Yesterday, Bitcoin price also jumped from around $10,300 to about $10,770 level. At the time of writing, BTC/USD has been trading at $10,550.

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