The VanEck SolidX Bitcoin Trust will issue shares to Qualified Institutional Buyers (QIBs) providing investors access to a physically-backed bitcoin product that is tradeable through traditional and prime brokerage accounts.
The shares are the first institutional-quality, cleared product providing exposure to bitcoin and enabling a standard ETF creation-and-redemption process. SolidX is the sponsor of the Trust and VanEck provides marketing services. BNY Mellon will act as the daily fund accountant, administrator and transfer agent, which includes facilitating the investor creation and redemption activity.
SolidX was among the first to file with the SEC a registered physically backed bitcoin ETF and the first to include an innovative insurance feature as part of its approach. VanEck and SolidX continue to work on being able to offer a registered product. The Trust’s issuance of Shares allows QIBs to access many of the same features and mechanisms envisioned in such a public offering, including insurance against the theft or loss of the Trust’s bitcoin private keys and the open-end creation and redemption of shares.
In the event the SEC approves the Trust’s registration of public shares, ie an Exchange Traded Fund (ETF), the 144A issued Shares may benefit from public market resales.
“Institutional demand for bitcoin exposure is uncertain, because institutional quality vehicles simply have not, to this point, been readily available,” says Jan van Eck, Chief Executive Officer of VanEck. “We’re introducing a solution for institutions that fits within their operational processes and the current regulatory framework.”
VanEck, a firm with a 50+ year track record of engineering forward-looking, intelligently designed investment strategies, has been a leader in the digital assets space, having pioneered several comprehensive digital asset indices through its MVIS subsidiary. The VanEck SolidX Bitcoin Trust will price its NAV based on the MVIS Bitcoin US OTC Spot Index, which is designed to track price feeds from major OTC bitcoin liquidity providers.
“Utilising OTC prices to value bitcoin enhances price transparency and the institutional quality of the offering,” adds van Eck. “The OTC desks in the MVIS Bitcoin US OTC Spot Index have efficient price discovery mechanisms, systems, policies, and procedures for correcting pricing anomalies, abnormalities, and extremities and are overseen by regulators.”
“As the first bitcoin product in the U.S. with standard ETF creation and redemption and established clearing and settlement processes, institutional investors can finally gain exposure to bitcoin within a familiar context,” says Daniel H Gallancy, Chief Executive Officer of SolidX. “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.”
The Shares can be quoted on OTC Link ATS, an SEC regulated alternative trading system using a fully attributable, network-based model for publishing quotes and negotiating trades, on September 5, 2019. Broker-dealers gain access through the proprietary OTC Dealer user interface or by using OTC FIX protocol.
“We are excited to facilitate transparent trading by broker-dealer subscribers in the VanEck SolidX Bitcoin Trust 144A securities and support the secondary liquidity needs of Qualified Institutional Buyers in this developing asset class,” says R Cromwell Coulson, President and Chief Executive Officer, OTC Markets Group. “Operating OTC Link ATS allows us to offer innovative companies and emerging industries new opportunities to connect with sophisticated investors.”
“We are heavily focused on supporting innovation in asset management, including in the delivery of digital currency strategies and investment options to investors,” says Jeff McCarthy, Global Head of Exchange Traded Products at BNY Mellon. “We are excited to leverage our firm’s focus on digital and alternative asset classes with aspects of ETF-servicing through the creation and redemption process to facilitate investor access into this first-of-a-kind offering access to Bitcoin.”
“We are excited to be working with the VanEck and SolidX teams,” says Nicholas Edwards, Head of Fine Art & Specie at AmTrust at Lloyd’s, adding that, “as a new development in the digital assets space, we are pleased to provide a bespoke insurance product for the VanEck SolidX Bitcoin Trust.”