ETF Primary Trading Market

VanEck files for a Bitcoin Strategy ETF, this time under 1940 Act

US asset manager, VanEck is trying again with the US Securities and Exchange Commission (SEC) for a regulated bitcoin exchange-traded fund.

In its latest attempt, the giant firm is offering its “Bitcoin Strategy ETF” to trade on the Cboe BZX Exchange. The proposed actively managed fund would not invest in the No.1 cryptocurrency directly, but rather futures and other investment vehicles that provide exposure to bitcoin.

VanEck, which has over $63 billion in assets under management, had previously filed with the US top watchdog for a regulated ETF tracking an index that draws data from five crypto exchanges.

At the time, VanEck’s Bitcoin ETF SEC filing stressed that the index aims to capture the total returns available to investors in the world’s largest crypto asset. The new ETF differs from previously-filed similar proposals in that it falls under the stricter 1940 law governing mutual funds.

SEC Chair Gary Gensler said last week that he would be open to approving a bitcoin-futures ETF, but only under certain conditions. The revelation rankled some fund managers who were hopeful of a physically backed ETF, but regulated like a normal exchange-traded fund under a 1933 law.

“The Fund does not invest in bitcoin or other digital assets directly.” The Bitcoin Strategy ETF will utilize bitcoin futures under the laws of the Cayman Islands, and it may also invest in “ETFs listed and traded in Canada, and exchange-traded products that provide exposure to bitcoin through the subsidiary,” Vaneck said it its bitcoin ETF filing.

VanEck has applied before for a physically-backed exchange-traded product. The first time was in collaboration with blockchain technology company, SolidX. Some had argued that the proposal from New York-based VanEck, the ninth biggest ETF issuer, was more likely to gain approval thanks to plans for a high minimum share price that would discourage retail investors.

However, their collective offering was foiled several times as the SEC cited fears of market manipulation.

VanEck and its partners also tried once to get around the regulatory rejection through employing Rule 144A, which provides a safe harbor from the SEC’s registration requirements. Specifically, this rule was introduced in 2012 to exempt the privately placed securities from registration restrictions, but the shares, in this case, can be sold only to ‘qualified institutional buyers’ and with shorter holding periods.