VanEck finally launches a Bitcoin-backed ETP

VanEck finally launches a Bitcoin-backed ETP
Written by:
Ali Raza
November 26, 2020
  • After years of failed attempts to launch a Bitcoin ETF, VanEck finally got its Bitcoin-backed ETP.
  • However, instead of getting an ETF, it launched an ETN, and it did it on Deutsche Börse Xetra.
  • Each ETN represents a certain amount of BTC, with the coin deposited in cold storage held by a custodian.

Investment management fund, VanEck, finally succeeded in launching a Bitcoin-backed Exchange Traded Product (ETP). However, instead of an ETF (Exchange Traded Fund), it launched an ETN (Exchange Traded Note), and it did not manage to get it listed on a US exchange.

VanEck finally got its Bitcoin Product, although not the one it was after

VanEck has spent years trying to launch a Bitcoin ETF in the US, with most of its efforts taking place in 2019. Unfortunately, the company’s lobbying to get its ETF proved unsuccessful, as the US SEC never gave it the approval it needed.

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Now, the company decided to take a new approach, and it finally managed to launch a Bitcoin ETP, as it revealed in a tweet yesterday, November 25th.

However, as mentioned, it did not launch an ETF, but an ETN, and it did not get it listed on a US exchange, but rather on Germany’s Deutsche Börse Xetra.

The newly-launched product is not a mutual fund, but a debt instrument. ETNs are typically used for tracking markets that are hard to access, such as Bitcoin, in this particular example.

Now, VanEck Vectors Bitcoin ETN is fully backed by BTC, and it allows investors to gain direct exposure to the BTC market.

Seeking an alternative

The company put a lot of effort into trying to get the US Securities and Exchange Commission to approve its Bitcoin ETF proposals. Unfortunately, it was never successful, and the proposal was even withdrawn by the CBOE earlier this year, in September.

To make matters worse, the withdrawal came only a month before the decision regarding the proposal was supposed to be made.

Dominik Poiger, VanEck’s product manager, noted that the new product, Bitcoin ETN, is fully collateralized. As such, it will use all the money invested in ETNs to actually buy Bitcoin. In other words, each ETN will represent a certain portion of the coin.

The coins themselves will be held in cold storage by a custodian bank called Bank Frick, headquartered in Liechtenstein.