SEC Receives Physically-Backed Bitcoin ETF Filing

The dream is still alive for a potential bitcoin ETF.

On Wednesday (June 6), VanEck announced a partnership with SolidX to list a “physically-backed” bitcoin exchange traded fund (ETF) that “will be insured against loss or theft of bitcoin.”

This is the third attempt made by VanEck for a bitcoin ETF who first filed for a bitcoin futures ETF in August 2017 before withdrawing the application a month later as requested by the US Securities and Exchange Commission (SEC). In this attempt, the companies will base the fund on physical bitcoins instead of futures.

VanEck will provide marketing services towards the ETF while SolidX will act as the sponsor while both companies will work together with regulators.

“I believe that bitcoin has emerged as a legitimate investment option, as a type of ‘digital gold’ that may make sense for investors’ portfolios,” Jan van Eck, CEO of VanEck said in the release.

According to the SEC filing done by the companies on Wednesday, if approved shares of the fund will be priced at 25 bitcoins per share, which totals just under US$200,000, as means of attracting institutional investors.

As the fund will be insured against loss or theft of bitcoin held by the trust, the filing states that the insurance will cover loss of bitcoin, theft, destruction, bitcoin in transit, computer hacks and loss of numerical codes (private keys), which are required to access bitcoin held by the trust.

Bloomberg reported that no fees have been set yet for the fund, but that it’ll be pricey compared to other ETFS due to the “risk and hassle” when it comes to trading cryptocurrencies.

“We believe that collectively we will build something that may be better than other constructs currently making their way through the regulatory process,” van Eck said in Wednesday’s announcement. “A properly constructed physically-backed bitcoin ETF will be designed to provide exposure to the price of bitcoin, and an insurance component will help protect shareholders against the operational risks of sourcing and holding bitcoin.”

Indeed, it’s been a volatile year for the bitcoin price: since the start of 2018 the digital currency has tumbled from US$13,625 to a low of US$6,182.50 on February 5. As of 6:58 p.m. EST on Wednesday bitcoin was priced at US$7,657.56, representing a 0.50 percent increase over a 24-hour period.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.