Three weeks after the Securities and Exchange Commission delayed a decision on their retail Bitcoin ETF proposal for at least the third time, VanEck Securities and SolidX Management announced they will offer shares in a Bitcoin trust to qualified institutional buyers.
The partnership will use Rule 144A of the Securities Act of 1933 to offer shares in the VanEck SolidX Bitcoin Trust, which provides access to a physically backed Bitcoin product. The trust’s net asset value is based on the Bitcoin U.S. OTC Spot Index from MVIX, a VanEck subsidiary. SolidX is the sponsor of the trust and VanEck provides marketing services.
The qualified institutional buyers that can purchase the trust’s shares include broker-dealers with at least $10 million invested in non-affiliated securities, investment firms that manage a minimum investment of $100 million in securities on a discretionary basis, banks and insurance companies. Retail investors are excluded from the offering.
“We’re introducing a solution for institutions that fits within their operational processes and the current regulatory framework,” said VanEck CEO Jan van Eck in a statement. He noted that “institutional demand for Bitcoin exposure is uncertain because institutional quality vehicles simply have not, to this point, been readily available.”
“Institutional investors can finally gain exposure to Bitcoin within a familiar context,” said SolidX CEO Daniel Gallancy, in a statement, adding that the Bitcoin trust represents “an exciting next step for the two firms to bring institutional-quality crypto asset products to the marketplace.”
The institutional offering will not prevent the partnership from offering public shares of its bitcoin ETF if the SEC eventually approves that proposal, at which time the 144A shares “may benefit from public market resales,” according to the VanEck/ SolidX statement.
Todd Rosenbluth, head of ETF & Mutual Fund Research at CFRA, says, “It will be interesting to see what kind of demand” the VanEck/Solid X trust shares for institutional buyers attract and how the investment trades “given the lack of approval from the SEC for a [Bitcoin] ETF and continued uncertainty about prospects. Bitcoin has remained a highly volatile investment in its short life.” Bitcoin was trading near $10,600 on Tuesday afternoon, well above its $3,400 low in early January but below its early July high nearing $12,600.
The SEC is expected to issue a final decision on three pending Bitcoin ETFs for retail investors, including the VanEck/SolidX proposal, in the coming weeks. The deadlines are Sept. 29 for Wilshire Phoenix United States Bitcoin and Treasury Investment Trust, Oct. 13 for the Bitwise Bitcoin ETF Trust and October 18 for the VanEck/SolidX Bitcoin Trust proposal.
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