By Landon Manning
As the race to launch and popularize various forms of Bitcoin exchange-traded funds (ETFs) accelerates, the investment firm VanEck has now successfully launched the third such product and it has already begun to see promising results.
A Bitcoin ETF has been a possibility that the international cryptocurrency community has been anticipating for years. Allowing institutional and private investors from all walks of life to have a secure and well-regulated way to invest into all sorts of various tangible and intangible assets, an ETF provides a real air of legitimacy that can make financial moves orders of magnitude easier to make. Although there has yet to be an approved ETF that directly pegs its value to bitcoin’s, in 2021 the seal has finally been broken on firms offering regulator-approved ETFs tracking the price of bitcoin through a variety of subtler and more indirect means.
On November 16, the U.S.-based investment fund manager VanEck became the third company to offer an ETF of this nature, dubbed the Bitcoin Strategy ETF (XBTF), coming immediately on the heels of similar products launched by ProShares and Valkyrie. A company press release indicates that the XBTF “will invest primarily in bitcoin futures listed and traded on the Chicago Mercantile Exchange, a category that has seen tremendous growth over the past three plus years.”
The main difference between VanEck’s offering and the two previous entries is the price, as XBTF is the lowest of the three by a solid margin. VanEck charges a fee of .065% on an annual basis, while the other two are both at .095%. VanEck seems confident that in the long term, this product will pay out in a big way for investors. The fund is also set up in such a way to prioritize ease-of-use for tax treatment, with VanEck establishing it as a C-corporation to similarly pay out dividends on a long time scale.
Although the XBTF has been available for just a few days, it is already enjoying strong support from the world of financial investment. Coming on the heels of the monumental opening enjoyed by each of the previous two Bitcoin ETFs, the explicit structure of the XBTF around long-term stability and gains with ease-of-use tax policy has won VanEck’s offering some real market action.
But even as this ETF based on indirect connection to bitcoin was approved by the U.S. Securities and Exchange Commission (SEC), VanEck’s proposal for a bitcoin spot ETF, matched directly with the value of BTC, was rejected by regulators on November 16. Claiming that they have serious reservations about the possibility for fraud in the world of bitcoin, the SEC claimed in its rejection that a bitcoin spot ETF is unlikely to happen until 2022 or later.
The dynamic energy of the model of bitcoin is sparking interest all over the world of finance, and people have been dying to get in on the success. As more robust financial products built around bitcoin come to market, it seems like the asset is poised for further growth in the near future.
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