While the crypto community is all excited about the recently launched Bitcoin ETF blocked by US Regulators, there is yet another back story to it. A leading financial lawyer has created a stir in the crypto community by calling it a “cute marketing strategy”. He further explains how calling it an ETF is wrong.
Limited ETF is a Made-Up Term
Leading Lawyer, Jake Chervinsky took to Twitter and has come up with an interesting school of thought for the recently launches Bitcoin Product by VanEck SolidX Bitcoin Trust. He further compared it to Grayscale Bitcoin Trust, which was launched 6 years ago.
Moreover, he clarified that ETFs are open to investments by institutions, retail, investment advisors, etc. Private investment trust shares are sold to accredited investors & may trade on an exchange someday.
VanEck and SolidX announced on Tuesday (September 3) that “the VanEck SolidX Bitcoin Trust (the Trust) will issue shares (the Shares) to Qualified Institutional Buyers (QIBs) per Rule 144A under the Securities Act of 1933, as amended (the Securities Act).
” These shares will “provide institutional investors access to a physically-backed bitcoin product that is tradeable through traditional and prime brokerage accounts.”
Jan van Eck, the CEO of VanEck, said
“Institutional demand for bitcoin exposure is uncertain, because institutional quality vehicles simply have not, to this point, been readily available. We’re introducing a solution for institutions that fit within their operational processes and the current regulatory framework.”
Jake further explained that Limited ETF is a made-up term, not a recognized & regulated type of financial vehicle. Rule 144A is a fairly complex way to make the shares of a private investment trust available on secondary markets.
“It’s not an “exchange-traded fund” in any meaningful sense. If you read Rule 144A, you’ll see it has almost no relation to the standards and regulations that apply to ETFs. Just because you can find a law that allows different investment vehicles to existing doesn’t make those vehicles similar in any way, shape, or form.”
A user named CryptoCribz agreed with him and said,
While the Securities and Exchange Commission (SEC) continues to delay its decision over the rights of retail investors, it will be interesting to note how does the newly launched Bitcoin Product establish base amidst all controversies.