VanEck, Bitwise Surge Ahead in Bitcoin ETF Race with $200 Million Commitment

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VanEck has committed $72.5 million in seed capital for its ETF. Bitwise has allocated $500,000. These figures come from S-1 documents filed with the U.S. Securities and Exchange Commission (SEC).

Per the filings, Bitwise is offering a $200 million investment opportunity, with Pantera Capital among the potential purchasers.

The S-1 forms play a crucial role in disclosing important information to the financial regulator. This includes details about the company’s business model, financial statements, management team, and associated risks. 

Seeding, as mentioned in the documents, refers to the provision of funds to launch an ETF.

While banks and broker-dealers often provide seed capital, ETFs can also self-seed by utilizing new capital or existing assets.

Bitwise, known as the largest crypto index fund manager in America, is offering a $200 million investment opportunity alongside its $500,000 seed capital. 

Pantera Capital Management LP, through its affiliated investment funds, has expressed interest in purchasing up to $200 million of shares in Bitwise’s offering. 

It’s important to note that indications of interest are not binding agreements. Potential purchasers have the flexibility to adjust their investment amount.

Founded in 1955, VanEck is a New York-based global investment and asset management firm specializing in ETFs, mutual funds, and managing institutional accounts. 

The company has been actively developing ETF products since 2006. In 2017, VanEck launched a Bitcoin (BTC) Futures ETF. However, like many others, it has been awaiting approval for a spot Bitcoin ETF from the SEC. 

The firm, along with the entire cryptocurrency market, hopes that the regulatory landscape will change in its favor this week.

VanEck and Bitwise’s applications are among several currently under review by the SEC. 

Bitwise even released an ad featuring “The Most Interesting Man in the World,” Jonathan Goldsmith, to promote its Bitcoin ETF. 

Bitwise and VanEck Warn About Crypto Risks in Filings

While the cryptocurrency industry sees ETFs as potential game-changers for Bitcoin and even Ethereum, both Bitwise and VanEck have cautioned investors about the risks associated with investing in Bitcoin ETFs.

VanEck’s filing explicitly warns investors that the value of Bitcoin and, consequently, the value of the Trust’s shares could decline rapidly, potentially reaching zero. 

The filing emphasizes that investing in the ETF carries risks. Spot ETF shares are not insured or guaranteed by any governmental agency or entity. 

Bitwise echoes a similar sentiment, highlighting the difficulty in evaluating the future development and acceptance of the Bitcoin network and other digital asset networks that are part of a rapidly changing industry.

SEC Chair Gary Gensler took to Twitter on Monday to caution investors about the risks involved in cryptocurrency investments. 

He emphasized that investments in crypto assets can be exceptionally risky and subject to volatility, citing instances of major platforms and crypto assets becoming insolvent or losing value. 

Gensler reiterated that investments in crypto assets continue to carry significant risk.

1⃣ Those offering crypto asset investments/services may not be complying w/ applicable law, including federal securities laws. Investors in crypto asset securities should understand they may be deprived of key info & other important protections in connection w/ their investment.

— Gary Gensler (@GaryGensler) January 8, 2024

As reported, Bloomberg analysts are increasingly optimistic about the approval of a spot Bitcoin ETF in the United States, with the odds now exceeding 90%. 

In a recent post, Bloomberg ETF analyst Eric Balchunas commented on the likelihood of the Securities and Exchange Commission (SEC) rejecting proposals following a flurry of updated filings. 

Balchunas stated that he would assign a mere 5% chance of rejection, leaving a small possibility open for such outcomes. 

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