VanEck Files Fresh Spot Bitcoin ETF Application


New York-based asset management firm VanEck has filed a new application with the Securities and Exchange Commission (SEC) for its spot market Bitcoin ETF

A Bitcoin ETF would allow more traditional investors uncomfortable directly managing cryptocurrencies to gain exposure to the asset. 

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In November 2021, the SEC rejected VanEck’s previous Bitcoin ETF application due to concerns surrounding “fraud and manipulation” of the Bitcoin spot market. 

The SEC has only approved futures-based Bitcoin ETFs, rejecting all spot market Bitcoin applications to cross its desk.

A spot market Bitcoin ETF provides exposure to Bitcoin, whereas the futures-based Bitcoin ETF is based on a Bitcoin futures contract. Futures-based ETFs are also typically more expensive than their spot market-based counterparts.

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On Wednesday, the SEC rejected Grayscale’s Bitcoin ETF application after nearly eight months of prolonged delay. Following its rejection, Grayscale has moved to the court against SEC

Cathie Wood’s Ark Invest and Bitwise have also faced rejections from the SEC for their Bitcoin ETF applications.

Grayscale Bitcoin product hits massive discount 

Currently, the closest product American investors have to a Bitcoin ETF is Grayscale’s Bitcoin Trust (GBTC). 

Unfortunately, the price of GBTC is currently trading at a massive discount of 30.74% to the spot price of Bitcoin. Yesterday, this figure was as high as 35%

GBTC discount and premium to NAV. Source: Ycharts

To recover its peg to Bitcoin, Grayscale said the product should be converted into a spot market Bitcoin ETF. 

This is because GBTC cannot be redeemed for underlying Bitcoin—if it could, traders would be rushing to buy the discounted GBTC and convert it to the real crypto, pocketing a large profit. Conversely, traditional ETFs are usually able to maintain their peg because they offer redemptions for the underlying assets. 

SEC Commissioner Hester M. Pierce has also voiced support for the approval of spot market Bitcoin ETFs.

“It is time for the Commission to stop categorically denying spot crypto exchange-traded products,” Peirce wrote. “Spot ETPs have launched in other countries without incident and with great investor interest”

But SEC Chairman Gary Gensler thinks otherwise. He has constantly opposed the spot market Bitcoin ETF, citing market manipulation and consumer protection concerns.

Bitcoin (BTC), the leading cryptocurrency with a market capitalization of $365 billion is up 0.72% over the past 24 hours and trades at $19,151.

BTC has lost 72% of its value after reaching an all-time high of $68,789.63 in November 2021.

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