VanEck Bitcoin ETF May Use Bitcoin for Seed Funding

  • VanEck’s updated prospectus for a proposed Bitcoin spot ETF contains seed funding language similar to BlackRock’s filing.
  • VanEck suggests using actual Bitcoin for seed funding, unlike BlackRock’s cash-based approach.
  • Seed funding involves financial institutions contributing capital to purchase ETF underlying assets in exchange for tradable shares, providing initial liquidity.

According to lawyer Scott Johnsson, the updated prospectus for VanEck’s proposed Bitcoin spot ETF contains seed funding language similar to BlackRock’s filing. However, instead of using cash for seed funding, VanEck recommends using actual bitcoin.

Seed funding is when financial institutions contribute capital to purchase an ETF’s underlying assets in exchange for shares that can be traded when the ETF launches. This provides initial liquidity.

In a post on X, Johnsson noted the similar wording to BlackRock’s recent amendment, likely since both firms use the same law firm, Clifford Chance. But he points out VanEck’s unique proposal to potentially seed its ETF with bitcoin rather than cash.

While cautioning against reading too much into it, Johnsson suggested this could indicate real intent from VanEck or “lazy lawyering.” 

Using bitcoin itself for seed funding would seemingly be a novel approach, immediately giving the ETF direct bitcoin exposure from day one. However, uncertainties remain around if and when the SEC might approve a spot bitcoin ETF.

VanEck filed a new application for a Bitcoin ETF in July 2023. Several other major financial companies, including BlackRock, Bitwise, WisdomTree, Fidelity, and Invesco, also have filings for potential bitcoin ETFs before the SEC.

The SEC has denied dozens of spot bitcoin ETF proposals in the past, citing concerns around fraud, investor protection, and the potential for manipulation. But pressure is building for approval in 2023 as the crypto industry awaits the first U.S.-listed bitcoin ETF.

Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.

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