Blockchain Firm SolidX, VanEck Partner To Launch Physically-Backed Bitcoin ETF

Announcements, News | June 7, 2018 By:

Blockchain firm SolidX has partnered with money management firm VanEck to launch a physically-backed bitcoin exchange traded fund (ETF).

SolidX is software development and financial services company focused on bringing blockchain technology to enterprise customers. The company has been involved with the bitcoin ecosystem since 2011 and with the financial markets since the early 2000s. It was the second company to file for a bitcoin exchange-traded product with the US Securities and Exchange Commission (SEC). The SEC, however, repeatedly delayed deciding on the application.

Founded in 1955, VanEck is an investment management firm offering mutual funds, exchange-traded products (ETP), variable insurance portfolios, separately managed accounts, and alternative investments. VanEck Vectors ETFs (about 75% of assets under management) and VanEck Mutual Funds (about 25% of assets under management) represent the company’s flagship investment offerings. It was first to file for a 40-Act bitcoin ETF, but withdrew the application last year after the SEC said it wouldn’t review a petition for a fund that intends to invest in virtual assets that aren’t yet available.

The companies announced on Wednesday that they will work jointly with regulators to list a physically-backed bitcoin ETF that will be insured against loss or theft of bitcoin. Under the arrangement, SolidX will act as the sponsor of the ETF and VanEck will provide marketing services. The ETF is expected to list on the CBOE BZX Equities Exchange.

Jan van Eck, Chief Executive Officer of VanEck, said that he believes that bitcoin has emerged as a legitimate investment option, as a type of ‘digital gold’ that may make sense for investors’ portfolios.

“We believe that collectively we will build something that may be better than other constructs currently making their way through the regulatory process,” said van Eck. “A properly constructed physically-backed bitcoin ETF will be designed to provide exposure to the price of bitcoin, and an insurance component will help protect shareholders against the operational risks of sourcing and holding bitcoin. It is important to communicate with investors about the risks as well as the opportunities, especially for new investment areas, and we have been committed to this effort.”

Daniel H. Gallancy, Chief Executive Officer of SolidX, said that in determining a marketing partner, they looked for a firm with a clear understanding of the potential of bitcoin and the role it can play in an investment portfolio.

“VanEck is deeply involved in this space, understands its potential, and has a long track record of successfully opening new avenues for investors to access unique and compelling investment opportunities,” said Gallancy. “We’re excited to work with the team at VanEck.”

In a public letter earlier this year, Dalia Blass, Director of the Division of Investment Management at the SEC, said that the division stands ready to engage in dialogue with sponsors regarding the potential development of bitcoin ETFs. But there are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors. These “issues” included concerns about market manipulations, whether funds could accurately value the volatile products, and whether investors can understand the risks.