VanEck returns to the charge – US asset manager VanEck has just filed a new Bitcoin ETF application with the SEC. VanEck withdrew its previous application for an exchange-traded fund in September 2019, after suffering several refusals from the SEC.
Bitcoin “too manipulated” to be traded on the stock exchange?
The ETF is a listed financial instrument that replicates the behavior of one or more financial assets. For now, the SEC has consistently refused requests from fund managers to set up a Bitcoin ETF.
The reason behind these refusals? The Bitcoin market would still be “too manipulated ”. From a pragmatic point of view, of course that the market is manipulated in the classic sense of the term, the market not being strictly speaking regulated. The practices pump and dump , of wash trading or of spoofing are indeed present in this market and their occurrences are well documented.
The success of the request is therefore closely linked to the proposals that VanEck has made to overcome this problem. The proposed solution would be to use the price of Bitcoin from several exchanges , via the services of CryptoComprate, to determine a fair value of the asset . This solution could make it possible to counter the biggest excesses of whales holding a lot of bitcoins and seeking to violently liquidate large positions, but for the rest it necessarily seems insufficient. This argument alone is therefore unlikely to convince the SEC.
VanEck persists and signs
This new demand is part of a new context for ETFs. In fact, more and more traditional players are participating in it, and the expectations of gains are therefore greater than the fears of manipulation for these financial professionals.
In addition, the SEC is in a period of transition with the resignation of Jay Clayton , at its head for several years, and the arrival of the Biden administration which could be more favorable to the development of the crypto ecosystem in the United States ( or not, obviously).
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If the request is successful, the ETF will be traded on the CBOE BZX exchange under the name VanEck Bitcoin Trust. While US investors wait, the closest thing to an ETF right now is the Grayscale Bitcoin Trust. This type of fund is a pooling of large sums of money for the purpose of buying bitcoins. However, this type of asset is not easily accessible to small investors , since it is limited to the famous “qualified investors” on US soil.