SEC Delays VanEck’s 3rd BTC Spot ETF Application

發佈於 Sep 27, 2022 | 部落格


The U.S. Securities and Exchange Commission (SEC) has delayed the third application by asset management firm VanEck for a Bitcoin spot-settled ETF, or exchange-traded fund. At a time where the crypto space is in dire need of some uplifting news, the federal securities regulator has pushed the timeline back for its decision by 45 days, citing the need for more time to consider the proposed rule change an approval would entail.

The SEC’s latest Bitcoin spot ETF brushoff comes after multiple applications were turned down in 2022, the year which most pundits believed would finally see the first greenlighting of this elusive milestone for the crypto space. Their reasoning was based on a wealth of positive indicators in 2021, such as its raging bull market, the SEC approving the US’ first Bitcoin Futures ETFs and neighboring Canada saying yes to its first slew of BTC spot ETFs. Moreover, a few crypto-linked ETFs have also launched, giving investors exposure to crypto firms such as MicroStrategy and Coinbase.

VanEck, based in New York and with $65 billion in assets under management, intends to list its product on the Cboe BZX exchange if the application goes through; that is, if it goes through. The fund would be the first of its kind to be approved – a Bitcoin spot ETF – as only Bitcoin futures ETFs have been greenlit by the agency thus far.

Many may be wondering why this is still the case, when even TradFi giants such as BlackRock have now embraced cryptocurrencies. Do regulators really need to go to such lengths to protect the public from exposure to Bitcoin and others like Ethereum? In this article, we examine the ins and outs of the Bitcoin ETF situation and where it’s likely headed.

What is a Bitcoin spot ETF?

An exchange traded fund (ETF) is a financial instrument that holds a basket of assets. Investors are able to buy shares in the fund, with the value fluctuating based on the prices of the underlying assets. In the case of a Bitcoin spot ETF, the fund contains Bitcoin rather than a derivative instrument, as would be the case with a Bitcoin futures ETF. Such an ETF would be able to exist on a standard securities exchange and would open up the field of investing in Bitcoin to a much larger group of people.

Aside from VanEck’s, several other applications for spot Bitcoin ETFs have been rejected. These include ones from NYDIG, Global X, and Grayscale.

While attempts in the US have been delayed, other countries have been allowing Bitcoin spot ETFs, including Canada and Brazil, with Bitcoin-backed exchange-traded products (ETPs) available in Germany and Switzerland.

What is a Bitcoin futures ETF?

A futures contract is a derivative instrument that lets someone purchase the right to buy or sell an asset at a set price on a given date. The method of investing is often used by speculators or those looking to hedge. Since it does not involve actually holding any BTC and does not exactly track the price of the asset, a Bitcoin futures ETF could be said to be a less tangible method of investing in the cryptocurrency than a spot ETF would be.

Currently, there are a number of Bitcoin futures ETFs in existence, with the US having begun allowing them in late 2021. Here is a list of some of the major ones:

ProShares Bitcoin Strategy ETF (BITO): This was the first Bitcoin ETF to be approved in the US. The ETF holds cash and securities in addition to Bitcoin derivatives. Its sister ETF, the ProShares Short Bitcoin ETF (BITI), speculates in the direction of a Bitcoin price drop.

Valkyrie Bitcoin Strategy ETF: This fund also holds corporate bonds, money market funds, and government securities. These are in addition to the Bitcoin futures contracts, which make up by the far the bulk of its holdings. 

VanEck Bitcoin Strategy ETF: On top of its quest for a spot-settled Bitcoin ETF, VanEck manages a Bitcoin futures ETF. As well as BTC, it also holds US Treasury bills and cash.

AdvisorShares Managed Bitcoin Strategy ETF: This actively managed ETF is able to reduce or increase its exposure to Bitcoin futures depending on market conditions. It also holds government securities, cash, and related ETFs in its portfolio.

Why are Bitcoin spot ETFs getting rejected by the SEC?

The SEC, which has a mandate to protect retail investors,  has indicated that it is still uncomfortable with the potential for market manipulation in the Bitcoin space were it to approve a Bitcoin ETF. The asset manager Grayscale, which has been seeking SEC approval for its own BTC spot ETF, has taken the regulators to court, citing arbitrary and capricious behavior on the part of the agency.

SEC Chairman Gary Gensler has previously voiced skepticism of Bitcoin spot ETFs while expressing cautious optimism with regard to the futures versions.

Why is it important to get a Bitcoin spot ETF?

The most crucial reason for why a Bitcoin spot ETF would be a game changer is what it would offer to institutional investors, who are often unable to invest client funds into actual digital assets exchanges. Through spot ETFs, it would be possible to see a much wider slice of institutional portfolios apportioned to Bitcoin and presumably other digital assets at a later date.

In addition, for members of the public wary of the dangers of storing crypto safely at a time when cybercrime is very much on the rise, using a Bitcoin spot ETF allows for the safe storing of the crypto without the investor worrying about custody.

When will there be a Bitcoin spot ETF in the US?

This is of course the question that no one has an answer to; however, there may be clues. “It would take a change in [SEC] commissioners,” says Deborah Fuhr, founder of ETFGI, an ETF-focused research and consultancy firm. “That could happen depending on if the government changes in 2024,” she added.

Another push for change could come when President Biden’s crypto executive order recommendations come due, depending on the outcomes.

Regardless, as the SEC continues to impede the approval process for Bitcoin spot ETFs, it seems likely that other countries will pick up the slack, as there is ample reason to believe the demand is out there, despite the adverse current market conditions.