VanEck Submits a New Bitcoin ETF Application

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VanEck Submits a New Bitcoin ETF Application

VanEck Submits a New Bitcoin ETF Application
Image: Shutterstock
Source: Decrypt
1656682778 01 Jul / 13:39

VanEck, a Fresh York-based asset management business, has submitted a new application to the Securities and Exchange Commission (SEC) for its Bitcoin spot market ETF.

A Bitcoin ETF would enable traditional investors uneasy with direct cryptocurrency management to obtain exposure to the asset.

The SEC rejected VanEck's earlier Bitcoin ETF proposal in November 2021 owing to "fraud and manipulation" concerns over the Bitcoin spot market.

The SEC has only authorized Bitcoin ETFs based on futures, denying all spot market Bitcoin ETF applications.

Bitcoin ETF gives exposure to Bitcoin, whereas Bitcoin ETF based on futures is based on a Bitcoin futures contract. In addition, futures-based ETFs are often more expensive than spot market-based ETFs.

After nearly eight months of delay, the SEC denied Grayscale’s Bitcoin ETF registration on Wednesday. In response to its denial, Grayscale has filed a lawsuit against SEC.

Ark Invest, managed by Cathie Wood, and Bitwise both had their Bitcoin ETF applications rejected by the SEC.

Grayscale’s Bitcoin Trust is the closest option American investors have to a Bitcoin ETF at now (GBTC).

GBTC is selling at a significant discount of 30.74 percent to Bitcoin’s market price. Yesterday, this number reached as high as 35%.

Grayscale recommended converting the product into a spot market Bitcoin ETF to regain its peg to Bitcoin.

This is because GBTC cannot be redeemed for the underlying Bitcoin; if it could, traders would rush to purchase the discounted GBTC and convert it to Bitcoin, pocketing a substantial profit. In contrast, classic ETFs can often retain their peg since they offer redemptions for their underlying assets.

Hester M. Pierce, an SEC commissioner, has also expressed support for introducing Bitcoin ETFs on the spot market.

Peirce stated, “It is time for the Commission to stop categorically denying spot crypto exchange-traded products. Spot ETPs have launched in other countries without incident and with great investor interest.”

However, SEC Chairman Gary Gensler disagrees. He has consistently opposed the Bitcoin spot market ETF, citing worries about market manipulation and consumer protection.

Bitcoin (BTC), the most prominent cryptocurrency with a market value of $365 billion, is currently trading at $19,151, an increase of 0.72 percent over the previous 24 hours.

After reaching a record high of $68,789.63 in November of 2021, BTC has dropped 72 percent of its value.

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