New York-based investment management firm VanEck was finally able to launch a crypto Exchange Traded Product (ETP), though not in the form it originally wanted, the firm said in a press release on 25 November.
According to the announcement, the product will provide investors with direct exposure to the most popular crypto asset, Bitcoin (BTC), without the need to buy it themselves. Listed on Germany’s Deutsche Börse Xetra, the new offering is an Exchange Traded Note (ETN), which is not a mutual fund, but a debt instrument that tracks an underlying index. In this case it is the MVIS CryptoCompare Bitcoin VWAP Close Index, which is linked to the price of Bitcoin. VanEck’s director of digital asset strategy, Gabor Gurbacs, said in a statement:
“VanEck is committed to support Bitcoin-focused financial innovation. Bringing to market a physical, fully-backed major exchange-listed Bitcoin ETP was a top priority of our firm. We succeeded! We hope to serve many clients and partners in Europe, Asia and across the world using our innovative, investment-friendly and regulatory-conscious access vehicles.”
Called the “VanEck Vectors Bitcoin ETN”, the new product is fully backed by Bitcoin, with each ETN representing a certain amount of the digital asset. In order to ensure the security of the ETN’s underlying assets, VanEck has decided to partner with Liechtenstein-regulated crypto custodian, Bank Frick, which will keep all the BTC in cold storage.
In the United States, VanEck has spent several years trying to get its Exchange Traded Fund (ETF) approved by the U.S. Securities and Exchange Commission (SEC). Originally, the firm filed for an ETF back in 2017, but that attempt was quickly shot down by the SEC. The firm then teamed up with financial service company SolidX in 2018, wanting to list a collaborative Bitcoin-based ETF, though that proposal was eventually withdrawn due to the U.S. government shutdown.
The ETF proposal was then re-submitted on 30 January, but the SEC delayed making a decision; first in March, then in May, and finally in August. In September, VanEck withdrew its proposal for the second and final time, and made use of Rule 144A to start offering limited Bitcoin ETF only to qualified institutional buyers.