ETFs

VanEck Files for a Bitcoin ETF All Over Again

The price of Bitcoin has been soaring lately. It crossed the $20,000-mark for the first time on Dec 16 and is trading above $34,000 in the New Year. Bitcoin soared about 200% last year. Institutional interest has led to this buoyancy. 

Sergey Nazarov, the cofounder of Chainlink, said a few days back that “rising inflation and increasingly negative views of modern monetary policy are forcing investors to look for alternative ways to preserve the value of their capital,” as quoted on Businessinsider

Corporations’ greater acceptance in allowing customers to hold bitcoin and other virtual coins in their online wallets and several central banks’ intention of rolling out digital currencies have been favoring the cryptocurrency.

In fact, a bitcoin ETF could finally see the day of the light in 2021 as VanEck recently filed an application with the SEC. Notably, the SEC had earlier rejected several bitcoin ETF proposals.

VanEck's Repeated Attempts for a Bitcoin ETF Launch

VanEck had previously filed for the bitcoin ETF, withdrawing its most recent application in September 2019. That was not the first time that VanEck has attempted to launch a bitcoin ETF. In mid-2018, the company had collaborated with blockchain company SolidX.

The plan was to make the product physical and not futures based, i.e. comprising actual bitcoin, which will be “insured against any loss or theft.” However, it failed to amass SEC’s trust as the regulatory body postponed its ruling on the fund (read: Yet Another SEC Disapproval for Bitcoin ETF: What Next?).”

Before that, SolidX’s proposal of a physically backed bitcoin ETF was dismissed by the Securities and Exchange Commission in March 2017 and VanEck withdrew its application for a futures-based bitcoin ETF in January 2018.

What’s Keeping SEC From Giving Its Nod?

SEC is worried about extreme price volatility in cryptocurrencies and liquidity in bitcoin-related funds. Per Reuters, the virtual currency can be deployed to quickly move money anywhere in the world without any central authority intervention, such as a bank or government. The market is pretty unregulated at the current level.

Will VanEck Taste Success This Time?

Since the coin has been performing extremely well in recent months and its acceptance from various players has been increasing, SEC may give a green signal this time.  The bulls are wagering on the probability of a continued run as many institutions start to launch projects using the underlying blockchain technology.

David Marcus, the head of Facebook Financial, also known as F2, said he hopes the cryptocurrency called Diem will hit the market in 2021. Diem has been rebranded recently from its erstwhile name Libra. It is run by a consortium called the Diem Association. JP Morgan Chase & Co.also said recently that the upsurge of cryptocurrencies in mainstream may replace gold.

The currency “will be on the road to $50,000 probably in the first quarter of 2021,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, one of the world’s biggest crypto lender, as quoted on Yahoo Finance.

Any ETF Alternatives to Play Bitcoin?

Though bitcoin ETFs are not available to investors, they have blockchain ETFs at their disposal. Per a source, “the blockchain in Bitcoin literally acts a ledger; it keeps track of the balances for all users and updates them as money changes hands.”

So, if investors cannot lay their hands on a bitcoin ETF now, they can definitely familiarize themselves with the concept through blockchain ETFs like likeAmplify Transformational Data Sharing ETF (BLOK). ETFs offering exposure to the blockchain ecosystem via semiconductor companies that make chips for bitcoin mining (or could make for some potential CBDCs) can be played. The most-popular funds include iShares PHLX Semiconductor ETF (SOXXand VanEck Vectors Semiconductor ETF (SMH) . 

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iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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