VanEck Securities and SolidX Management announced plans to launch an institutional-grade Bitcoin exchange-traded funds (ETF) for accredited institutions such as hedge funds, banks, etc. The Bitcoin ETF will not be available to retail investors yet.
The Rule 144A Exemption
The Securities Exchange Service Commission (SEC) postponed the decision to approve VanEck/SolidX Bitcoin ETFs hence the latest use of an exemption Rule 144A law that allows sale to ‘qualified institutional buyers’. A press release from the firms confirmed that the Bitcoin ETFs will finally be issued out – albeit with limited options – starting this Thursday.
“Rule 144A modifies the Securities and Exchange Commission (SEC) restrictions on trades of privately placed securities so that these investments can be traded among qualified institutional buyers, and with shorter holding periods—six months or a year, rather than the customary two-year period.”
The companies will use SEC’s Rule 144A exemption to sell their shares in the Bitcoin Trust which in turn exposes them to the ETF. Only a select group of companies will be eligible to participate in the ETF sale, but not retailers.
A Hope for Approval?
The new asset class becomes the first-ever institutional-grade asset providing “exposure to BTC and enabling a standard ETF creation-and-redemption process.” This will increase the liquidity of Bitcoin across the board offering qualified institutions a physically-backed Bitcoin asset product available in traditional markets and brokerages.
The director of digital asset strategies at VanEck/MVIS, Gabor Gurbacs is looking forward to success of the product as they await on the decision of the SEC. He said,
“This Qualified Institutional Buyers (QIBs) only 144A Bitcoin product may pave the way for institutional Bitcoin adoption and showcase that an appropriately regulated ETF structure can work in practice.”
Daniel H. Gallancy, CEO of SolidX, shared similar sentiments and looks at a bright future for the product. He commented,
“We view the product as an exciting next step for SolidX and VanEck in our partnership as we work to bring institutional-quality crypto asset products to the marketplace.”