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VanEck Letter To SEC Details ‘Appropriate’ Answers To Bitcoin ETF Worries

Wilma Woo | Jul 24, 2018 | 12:00

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Investment management firm VanEck has lobbied the US Securities and Exchange Commission (SEC) in a fresh attempt to interest the regulator in authorizing a Bitcoin exchange-traded fund (ETF).

VanEck: Proposed ETF ‘Consistent’ With Law

In a letter dated July 20, VanEck, which earlier this month announced it planned to collaborate with fellow operator SolidX to launch a fund, reiterated its belief that the industry was both ready and able to support it.

The SEC had previously rejected the possibility of allowing ETFs from both companies in 2017, telling VanEck via a Staff Letter in January this year that various “questions” needed answering “satisfactorily” before it would be “appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products.”

VanEck now believes it has provided answers to those questions.

“In the Staff Letter, you raise a number of concerns for cryptocurrency and cryptocurrency-related investment funds concerning valuation, liquidity, custody, arbitrage, potential manipulation, and other risks,” the response reads.

We believe these concerns have appropriate answers […] moreover, by offering investors exposure to bitcoin through a regulated investment product, we believe the proposed ETF will be consistent with the Securities and Exchange Commission’s […] mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

VanEck has swung back at the SEC, defending its ETF in a July 20 letter to the agency, showing the liquidity and diversity of bitcoin markets: pic.twitter.com/0KdOuGDtnl

— Frank Chaparro (@fintechfrank) July 24, 2018

ETF Could ‘Reduce Potential Manipulation’

A detailed examination of the SEC’s misgivings followed, focusing on valuation, liquidity, custody, arbitrage, potential market manipulation, and miscellaneous “other risks.”

“Given the proposed ETF’s regulation under the Securities Act of 1933 and 1940 Act and the fact that it offers exposure via regulated and surveilled bitcoin futures, we reasonably expect the proposed ETF to reduce potential manipulation and operational risk associated with a bitcoin investment product,” VanEck forecast.

Talk of US regulators softening their stance on ETFs since last year has led many commentators to suggest Bitcoin prices are already reacting to the potential news.

As Bitcoinist reported, the SEC has fielded huge numbers of positive comments about the instrument from sources beyond would-be operators.

Concluding its case, VanEck stressed an ETF would be “consistent” with all relevant legislation, adding:

…By offering investors exposure to bitcoin through a regulated investment product, we believe the proposed ETF will be consistent with the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

What do you think about VanEck’s defense of a Bitcoin ETF? Let us know in the comments section below!

Images courtesy of Twitter, Shutterstock