VanEck, SolidX to Offer Bitcoin ETF to Institutions via SEC Exemption

Update (13:15 UTC, Sept. 3 2019): Added details and comment from a press release sent after publication of this article.

While the U.S. Securities and Exchange Commission (SEC) has so far blocked a number of proposed bitcoin ETFs, two firms aim to launch a more limited option this week.

Announced Tuesday, VanEck Securities and SolidX Management – which have previously had a decision on their proposed bitcoin ETF postponed by the SEC – revealed are taking an unusual route to bypass the regulatory hurdles. They will use an SEC exemption that will allow shares in their VanEck SolidX Bitcoin Trust to be offered to institutions such as hedge funds and banks, but not to retail investors.

The shares are to be sold from Thursday under the SEC’s Rule 144A, which allows privately placed securities to be traded among “qualified institutional buyers” with shorter holding periods and without the requirement to register with the SEC.

The firms said in a press release:

“The shares will provide institutional investors access to a physically-backed bitcoin product that is tradeable through traditional and prime brokerage accounts. The Shares are the first institutional-quality, cleared product providing exposure to bitcoin and enabling a standard ETF creation-and-redemption process.”

SolidX is sponsoring the trust, while VanEck is providing “marketing services,” according to the release. Further, BNY Mellon has come onboard as the daily fund accountant, administrator and transfer agent. This includes “facilitating the investor creation and redemption activity.”

Investors are also insured against “the theft or loss” of the bitcoin private keys held by the trust, and are provided open-ended creation and redemption of shares, the firms said.

Daniel H. Gallancy, CEO of SolidX, commented:

“As the first bitcoin product in the U.S. with standard ETF creation and redemption and established clearing and settlement processes, institutional investors can finally gain exposure to bitcoin within a familiar context. We view the product as an exciting next step for SolidX and VanEck in our partnership as we work to bring institutional-quality crypto asset products to the marketplace.”

To date, the SEC has not approved any crypto ETF, although SEC Commissioner Robert Jackson said early in 2019 that he believes an ETF proposal will “eventually” meet the SEC’s standards.

On Aug. 12, the SEC delayed decisions on bitcoin ETF proposals by Bitwise Asset Management, VanEck/SolidX and Wilshire Phoenix, all of which hope to become the first to offer a crypto ETF in the U.S. Those decisions are now scheduled for later this month and in October.

VanEck executive Gabor Gurbacs image via CoinDesk archives