SEC Takes Public Comment, Reviews VanEck SolidX ETF Risks


We’ve been waiting for quite a while for an SEC ruling on the VanEck SolidX Bitcoin ETF, which would be the first of its kind to offer exchange traded fund options for cryptocurrency on an American exchange.

Now, after the CBOE has withdrawn and resubmitted its application, the SEC is taking another step, soliciting public feedback as the board continues to review a proposal.

Here’s some of what stakeholders are looking at in the original proposal filed in June of last year.

In a section of the document entitled “The Risks You Face,” writers lay out the risk of investment in a related trust which includes “the risk of losing money,” starting out this way and identifying the first Bitcoin risk as “Bitcoin has a short history.”

“Bitcoin was invented in 2009: the asset, bitcoin, and its trading history thus have existed for a relatively short time, which limits a potential shareholder’s ability to evaluate an investment in the Trust.”

Analysts also cite volatility as a major issue:

“The Shares are designed to provide shareholders with exposure to the daily change in the U.S. dollar price of Bitcoin, as measured by the MVBTCO, and the value of the Shares correlates directly to the value of the Bitcoin held by the Trust, less the Trust’s fees and expenses.  The price of Bitcoin is volatile … Bitcoin speculation regarding future appreciation in the value of Bitcoin may inflate and make more volatile the price of a Bitcoin as measured by the MVBTCO. ….  In the event the price of bitcoin declines, the value of the Shares would decline proportionately. The price of the Shares may change quickly in response to changes in the price of Bitcoin.

Here’s another interesting part of the risk assessment profile that focuses on Bitcoin adoption:

“As a new asset and technological innovation, the Bitcoin industry is subject to a high degree of uncertainty. The adoption of bitcoin will require growth in its usage and in the blockchain, for various applications. “

Many of the events that we report on for crypto currency investors involve adoption in some way shape or form. Looking back you can see various types of institutional adoption for block chain and crypto currency over the past year and beyond.

Many investors believe these adoptions will continue to occur, and are putting their money behind Bitcoin on the strength of that belief. Do due diligence around crypto coins to see for yourself how likely you view stable adoption based on industry news and events.