Regulators Rebuff VanEck’s Spot Market-Based Bitcoin ETF

The U.S. Securities and Exchange Commission (SEC) has given the thumbs down to a VanEck bitcoin spot market ETF. The fund would have tracked the leading cryptocurrency directly rather than via the futures market. The securities watchdog had until Nov. 14 to make a call.

Even though it was a longshot, bitcoin investors were holding out hope that the SEC would see reason. VanEck’s application has been sitting on the SEC’s desk since the end of last year. It was filed by the CBOE BZX Exchange. Jan van Eck, CEO of the global investment manager, expressed his disappointment on Twitter.

 

We are disappointed in today’s update from the SEC declining approval of our physical bitcoin ETF. We believe that investors should be able to gain #BTC exposure through a regulated fund and that a non-futures ETF structure is the superior approach. @tyler @gaborgurbacs

— Jan van Eck (@JanvanEck3) November 12, 2021

Holding Out Hope

The crypto community had reason to hope. The SEC did not stand in the way of the ProShares Bitcoin Strategy ETF (BITO) from making its debut last month. The ProShares version gives investors exposure to the futures market rather than direct exposure to bitcoin. So it seemed fitting that perhaps SEC chairman Gary Gensler and crew might be persuaded to allow investors to gain direct exposure to BTC via an ETF.

Regulators have also tipped their hand to the fact that as long as they would lose sleep over the risk of market manipulation, they would not allow a bitcoin spot-market ETF. The regulatory pendulum has swung in that direction, and investors will have to live to fight another day.

Crypto index funds company Bitwise revealed in recent days that the firm has withdrawn its application with regulators for a bitcoin futures ETF. The firm still has a spot-market bitcoin ETF filing pending.

 

1/ Today, @BitwiseInvest withdrew its application to list a bitcoin *futures* ETF. (Our spot filing remains.)

Thought I’d share our thinking.

A thread…

— Matt Hougan (@Matt_Hougan) November 10, 2021

In addition, Grayscale Investments is looking to convert its bitcoin trust into a spot-market ETF. According to reports, the firm is hopeful that regulators will approve its filing by next summer.

Buying the Dip

The bitcoin price is falling in response, having tumbled 4% at last check to approximately $62,700. Bitcoin was knocking on the door of $70,000 just a couple of days ago, and the latest declines are a reminder of just how volatile the crypto market can be.

The bitcoin price might be down but it is not out. Investors are already discussing the opportunity to buy the dip. If the bullish bitcoin price forecasts come true, bitcoin won’t be trading at these levels for long.