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VanEck’s Limited ETF Fails to Impress in Launch

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September 10, 2019 | 

Darryn Pollock |  0 Comments| 

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Investment management firm VanEck, one of the companies trying to champion a Bitcoin ETF, with its own application currently under delayed review from the SEC, has attempted to bypass the regulations with the launch of a limited offering. 

This limited offering, a new trust focused on institutional investors only, was supposed to be an alternative to the not yet accepted Bitcoin ETF for institutional investors to get a feel. The trust was purported to be entirely similar to what a Bitcoin ETF would be like. 

However, on the launch of this offering, there has been muted success as it has been reported that they have only issued 4 Bitcoin in the opening stages of this product. Data indicates that since its launch at the start of the month, VanEck SolidX Bitcoin Trust 144A Shares total net assets are only $41,400.

The concern over this muted launch may have to do with the comments that are going around that this limited ETF is not like an ETF at all, and that this is more akin to the Grayscale Bitcoin Trust, which was launched almost six years ago.

The hopes from VanEck was to try and unlock the massive institutional investment market and allow them access to Bitcoin in a manner which was familiar and suited to their needs. They claimed: “VanEck SolidX Bitcoin Trust 144A Shares… looks and feels like a traditional ETF,” its official description read.”

Waiting for the holy grail

The idea of a Bitcoin ETF has been mulled over since as far back as 2016. In 2017 the Winklevoss twins put forward their application to the SEC to try and open the doors to institutional investors, but we're stuck down. 

Since then there has been a slew of applications that have tried to meet the SEC’s standards, with all failing. The latest round of applications have been considered by the SEC, and are still being mulled over with the general consensus not being too positive. 

Not a real ETF

This limited offering, intended to perhaps be a bit of a stop gap while the applicants waited to hear their fate by the SEC, has since been criticized, and that criticism vindicated due to the poor performance thus far. 

industry lawyer, Jake Chervinsky, arguing the product did not represent a legal ETF, something which remains outlawed by United States regulators. 

“This is misleading. The VanEck SolidX Bitcoin Trust is *not* an ETF. It looks exactly like the Grayscale Bitcoin Trust, which was launched almost six years ago,” he told his Twitter followers.

More so cryptocurrency commentator Alex Krüger has summarized that this poor performance is down the fact that VanEck have had a poor launch of a product that has no real demand at the moment. 

This trust is just a bad launch of a product for which there's not much demand,” he said.

Indeed, the offering by VanEck in this state is not what many have been getting potentially excited about, and for investors, there is no need to take on a  watered down offering while they wait for the real thing. 

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