To target ETF-inspired Bitcoin customers in Europe and Asia, VanEck Europe has launched an ETF-like Bitcoin product. The product is known as ETN which has a slight difference from ETF.
In 2019, VanEck attempted many times to register a Bitcoin exchange-traded product with the United States Securities and Exchange Commission, but the US authority did not give a green signal to the company.
Difference Between ETF and ETN
According to Gabor Gurbacs, digital asset strategist at VenEck Europe, the company has listed an exchange-traded note (ETN) on Deutsche Börse Xetra located in Germany. Apparently, an ETN is similar to an ETF, but there is a lot of difference between both.
The newly launched BTC derivative product is backed 1:1 with Bitcoin, which means VanEck needs to get more and more supply if the demand increases. According to the official statement, there will be the availability of ETN worth $2 million for traders and investors other than the United States. Users from the countries, such as Liechtenstein, United Kingdom, Germany, and Netherlands will have an access to the product.
As the institutional rush in the crypto space is high, traditional institutions are trying to offer other options that create a perfect bridge between the traditional world and the cryptocurrency space. Investors, who were against Bitcoin, are now acknowledging the potential of the world’s leading digital asset. Eliezer Ndinga, the research associate at 21Shares and Amun Tokens, stated:
“Hedge fund manager Ray Dalio, historically a Bitcoin skeptic, has begun to wonder whether he’s missing something about Bitcoin. As a result, more issuers are entering the industry to offer institutional-grade products to financial institution.”
Outside of the United States, there was an already trend of exchange-traded products (ETPs). For instance, XBT Provider rolled out a similar product in 2015.
SEC’s Rejection for Exchange-Traded Fund
The company struggled to get permission from the SEC but did not become successful to introduce an ETF product for the US investors. After the Securities and Exchange Commission rejected its proposal, VanEck withdrew its proposal in September 2019.
Underlying exchange-traded note, there is a back of a significant amount of Bitcoin. “Our Bitcoin ETN is fully collateralized. This means that the money invested in the ETN is actually used to buy Bitcoin,” Poiger explained. Bank Frick, the crypto custodian based in Liechtenstein will be employed for the deposit of capital.