VanEck is back in business – US asset manager VanEck has just filed a new application for a Bitcoin ETF with the SEC. VanEck had withdrawn its previous ETF application in September 2019, after several refusals by the SEC.
Bitcoin „too manipulated“ to be traded on an exchange?
The ETF is a listed financial instrument that replicates the behaviour of one or more financial assets. For the time being, the SEC has always refused requests from fund managers to create a Bitcoin ETF.
The reason behind these refusals? The Bitcoin market would still be „too manipulated“. From a pragmatic point of view, of course the market is manipulated in the classical sense of the word, as the market is not strictly speaking regulated. The practices of pump and dump, wash trading and spoofing are indeed present on this market and their occurrences are perfectly documented.
The success of the application is therefore closely linked to the proposals Bitcoin Lifestyle that VanEck has made to alleviate this problem. The proposed solution would be to use the Bitcoin price of several exchanges, via the services of CryptoComprate, to determine a fair value of the asset. This solution could make it possible to counter the biggest excesses of whales holding a lot of Bitcoin and seeking to violently liquidate large positions, but for the rest it seems necessarily insufficient. It is therefore unlikely that this argument alone will be enough to convince the SEC.
VanEck persists and signs
This new demand is in a new context for ETFs. Indeed, more and more traditional players are taking part in it, and the expectations of profits are therefore higher than the fears of manipulation for these financial professionals.
Furthermore, the SEC is in a period of transition with the resignation of Jay Clayton, who has been at the helm for several years, and the arrival of the Biden administration, which could be more favourable to the development of the crypto ecosystem in the United States (or not, obviously).
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If the application is successful, the ETF will be traded on the CBOE BZX under the name VanEck Bitcoin Trust. While US investors wait, the closest thing to an ETF at the moment is the Grayscale Bitcoin Trust. This type of fund is a pooling of large sums of money to buy bitcoins. However, this type of asset is not easily accessible to small investors, as it is limited to the famous „qualified investors“ on US soil.