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VanEck Allocates $72.5 Million to Seed Its Prospective Spot Bitcoin ETF

Last Updated January 9, 2024 10:22 AM
Teuta Franjkovic
Last Updated January 9, 2024 10:22 AM

Key Takeaways

  • VanEck has made a significant investment in its prospective spot Bitcoin ETF.
  • Several asset managers are vying for a competitive edge in the ETF market by offering different fee structures.
  • Potential approval of spot Bitcoin ETFs could transform crypto landscape

Bitcoin recently experienced a surge  past $47,000. This climb coincided with major issuers, including BlackRock and Fidelity,  submitting updated documents to the United States Securities and Exchange Commission (SEC).

In related news, VanEck is intensifying the race in the cryptocurrency market by investing $72.5 million  into its prospective spot Bitcoin exchange-traded fund (ETF), as revealed in the amended S-1 form they filed on January 8.

VanEck in Bitcoin Shopping Spree

VanEck’s recent filing  indicates that the company acquired $72.5 million worth of Bitcoin on January 5, translating to 1,450,000 shares at a price of $50 per share. This purchase amounted to a little over 1,640 BTC in total.

The Seed Creation Baskets for the fund were delivered on January 5. As of January 8, the value of the fund’s Bitcoin holdings was worth $73.8 million.

In its filing , VanEck issued a warning that the value of their investment could potentially drop to zero. This highlights the inherent risks associated with cryptocurrency investments.

The company said :

“The value of Bitcoin and, therefore, the value of the Trust’s Shares could decline rapidly, including to zero. You could lose your entire investment. The Shares are neither insured nor guaranteed by the Federal Deposit Insurance Corporation, or any other governmental agency or other person or entity.”

Established in 1955, VanEck is a New York-based global investment and asset management firm that specializes in ETFs, mutual funds, and managing accounts for institutional investors. VanEck started to develop ETF products in 2006.

In 2017, VanEck introduced a Bitcoin Futures ETF. However, like many other firms, it is still awaiting approval from the SEC for a spot Bitcoin ETF. The firm, along with the broader cryptocurrency market, is hopeful for a change in this stance from the SEC in the upcoming week.

Bitwise Secures $200 Million Seed Fund

In a parallel development, Bitwise’s amended S-1 filing , also on January 8, disclosed that Pantera Capital was the key investor behind its $200 million seed fund, with Bitwise itself contributing $500,000 towards its proposed ETF. Pantera’s investment is conditional, depending on the SEC’s approval of the ETF.

BlackRock and Fidelity have set up comparatively modest seed funds for their ETFs, with BlackRock allocating $10 million and Fidelity $20 million. BlackRock’s latest filing reveals that it purchased 227.9 BTC on January 5. However, it’s currently unclear if Fidelity has also acquired Bitcoin for its ETF.

In contrast, the amount of Bitcoin secured by VanEck and Bitwise indicate an impending intense competition among these fund managers once their products are launched. The investments by VanEck and Bitwise suggest they are gearing up for a robust entry into the market.

ETF Approval Could Transform Crypto Landscape

The potential approval of spot Bitcoin ETFs could mark the beginning of a significant shift in mainstream cryptocurrency investment, providing a regulated avenue akin to traditional asset classes. Such a development is expected to draw both institutional and retail investors. This could direct billions of dollars into digital assets and could, potentially, fuel a price increase.

Nevertheless, it’s crucial to acknowledge that the approval of these ETFs is not a certainty. The SEC has traditionally exercised caution regarding cryptocurrency-related products, often highlighting concerns about market risks, including fraud and manipulation. However, the evolving regulatory landscape, combined with growing interest from major financial institutions, indicates that an approval could be forthcoming.

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