SEC Mulls Unconventional Bitcoin ETF Application

SEC Mulls Unconventional Bitcoin ETF Application

The U.S. Securities and Exchange Commission (SEC) has formally issued a call for public comment on yet another proposal to list a bitcoin ETF (exchange-traded fund) on a regulated exchange.

VanEck, SolidX Partner to Create Physically-Backed Bitcoin ETF

This development came in response to a proposal, submitted by Chicago-based derivatives exchange CBOE, to list and trade shares of SolidX Bitcoin Shares, which itself has been issued by the VanEck SolidX Bitcoin Trust.

CBOE was the first US exchange to list bitcoin futures products, and executives have indicated that they intend for the platform to continue to lead in the nascent cryptocurrency derivatives industry.

According to the filing documents, the trust will invest directly in physical bitcoin not bitcoin futures and each share will represent a fractional undivided beneficial interest in the trusts net assets.

More from the filing:

Thus, SolidX Bitcoin Shares will be a very similar product to the Bitcoin Investment Trust (OTC: GBTC), a creation of Grayscale Investments and the most popular bitcoin investment product wrapped in a traditional financial instrument. GBTC is currently traded over-the-counter (OTC), which makes it far less liquid than if it was listed on an SEC-regulated exchange.

Fund Seeks to Target High Net-Worth Investors in Bid for SEC Approval

This bitcoin ETF proposal is targeting wealthy investors in response to SEC concerns over marketing such products to retail buyers.

As CCN reported, the SEC has raised significant concerns about giving a bitcoin ETF its stamp of approval, largely due to the fact that this will make this volatile, high-risk investment product much more accessible to retail investors.

However, this fund VanEcks third attempt to create and list a bitcoin ETF has attempted to evade those concerns by making shares too expensive for most retail investors to purchase. As of the date of the registration statement, each share represented approximately 25 bitcoins, worth roughly $150,000 at the time of writing.

Thats not the only difference between this fund and other proposed bitcoin ETFs. Given regulatory concerns about the integrity of cryptocurrency spot markets, most bitcoin ETF proposals stated that the funds would instead trade bitcoin futures, which are regulated by the Commodity Futures Trading Commission (CFTC). SolidX Bitcoin Shares, in contrast, will hold bitcoin directly or at least through a custodian.

Individuals can send the SEC comments on the proposal through the agencys internet comment form or by emailing [emailprotected] All submissions should include filing number SR-CboeBZX-2018-040 on the subject line.

Images from Shutterstock


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