- January 11, 2024
- Posted by: [email protected]
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The race for a Bitcoin exchange-traded fund (ETF) has intensified as financial heavyweights VanEck and Bitwise make substantial financial commitments, according to recently filed S-1 documents with the U.S. Securities and Exchange Commission (SEC). VanEck has committed an impressive $72.5 million in seed capital, while Bitwise, recognized as the largest crypto index fund manager in the U.S., has allocated $500,000 for this purpose.
Bitwise, not content with its seed capital commitment, is offering an investment opportunity of $200 million, with Pantera Capital identified as a potential purchaser, as outlined in the S-1 filings. Seeding, a pivotal term in launching an ETF, involves providing funds for its initiation. While traditional sources like banks and broker-dealers often contribute seed capital, ETFs can also self-seed by utilizing new capital or existing assets.
Pantera Capital Management LP, through its affiliated investment funds, has expressed interest in acquiring up to $200 million worth of shares in Bitwise’s offering. It’s crucial to note that indications of interest are non-binding, offering potential purchasers flexibility to adjust their investment amounts.
VanEck, an established global investment and asset management firm founded in 1955, has been actively pursuing ETF development since 2006. Despite launching a Bitcoin Futures ETF in 2017, the firm, like many others, eagerly awaits SEC approval for a spot Bitcoin ETF. The entire cryptocurrency market, including VanEck, is optimistic about a potential change in the regulatory landscape.
Both VanEck and Bitwise are among several applicants awaiting SEC review, with Bitwise employing a creative approach by featuring Jonathan Goldsmith, “The Most Interesting Man in the World,” in an advertisement to promote its Bitcoin ETF.
While the crypto industry sees ETFs as transformative for Bitcoin and Ethereum, caution is advised. Both VanEck and Bitwise emphasize the associated risks. VanEck’s filing warns investors of potential rapid declines in the value of Bitcoin and the trust’s shares, possibly reaching zero. Bitwise echoes similar sentiments, stressing the difficulty of evaluating the future of Bitcoin and other digital asset networks in a rapidly changing industry.
SEC Chair Gary Gensler, taking to Twitter, echoed concerns about crypto investments, emphasizing their exceptional risk and volatility. Gensler highlighted instances of insolvency and value loss on major platforms and crypto assets, reinforcing the significant risks tied to crypto investments.
Despite the cautious tone, Bloomberg analysts express growing optimism, with the odds of a spot Bitcoin ETF approval in the U.S. exceeding 90%. Even in the face of updated filings, analysts like Eric Balchunas assign a minimal 5% chance of rejection, underscoring the prevailing positive sentiment within the industry.
