Bitcoin

The SEC Starts Reviewing Application for Physically-Backed Bitcoin ETF

The SEC Starts Reviewing Application for Physically-Backed Bitcoin ETF

Avid cryptocurrency industry observers will by now be well-versed in the ongoing struggle to have the US Securities and Exchange Commission (SEC) approve a Bitcoin-based exchange-traded fund – a so-called ETF.

Yesterday, the SEC released a post on their website reading that they had now begun to formally review yet another Bitcoin ETF proposal. The crux? This particular ETF is to be backed by physical Bitcoin.

Moreover, those behind this physically-backed Bitcoin ETF are SolidX and VanEck, and they are looking to list the relevant fund – tentatively dubbed the VanEck SolidX Bitcoin Trust – on the CBOE BZK Exchange.

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This might sound somewhat familiar to some, as CBOE initially applied to list the VanEck SolidX Bitcoin Trust this June – however, the SEC subsequently delayed its decision on whether to green-light the fund or not, imposing a new September 30th deadline.

It is worth noting that the VanEck-SolidX ETF would hold so-called ”physical Bitcoins”, instead of cryptocurrency futures contracts. This is unlike the majority of previously proposed Bitcoin ETFs, but it remains to be seen whether this will make a difference in whether the fund is approved or not.

Moreover, the VanEck-SolidX venture is also looking to be covered by ”comprehensive insurance underwritten by various insurance carriers”, in an effort to protect investors against potential loss or even theft of the ETF’s Bitcoin holdings.

It should be noted that although any approved Bitcoin-based ETF would be regarded as a major leap forward for the institutionalization and subsequent adoption of cryptocurrencies, this fund might not be readily accessible to all investors.

More specifically, the fund will be made up of shares that each consist of 25 Bitcoin, currently worth in excess of $160,000. Due to this, the VanEck-SolidX ETF would presumably be geared towards affluent investors and institutions.

Nevertheless, this could ultimately prove beneficial for the approval of the fund, as investors and institutions are generally considered more experienced buyers of investment products – meaning that the SEC’s will not need to account for a large percentage of inexperienced investors.

Up until this point, the SEC has denied every Bitcoin-based exchange-traded fund application. Nonetheless, Toshi Times has previously covered how the SEC seems to have a commissioner quite open to the notion of cryptocurrency ETFs, in Commissioner Hester Peirce.

Moreover, Peirce recently stated that the SEC should not hold back on approving cryptocurrency products. In addition to this, the Senate approved a new SEC commissioner just two weeks ago, which may turn the tables on future votes on ETFs.

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