Investment management firm VanEck and blockchain company SolidX Partners made their third attempt to launch a Bitcoin exchange-traded fund on June 6, 2018, filing a joint application with the U.S. Securities and Exchange Commission for a physically-backed product aimed squarely at institutional investors. The proposed VanEck SolidX Bitcoin Trust would trade on the Cboe BZX Exchange under the ticker symbol XBTC, with each share priced at a hefty $200,000.
TL;DR
- VanEck and SolidX filed for a physically-backed Bitcoin ETF — their third attempt at regulatory approval
- Each share would cost $200,000, targeting institutional rather than retail investors
- The ETF would track an MVIS Bitcoin Index based on over-the-counter prices, not exchange prices
- Bank of New York Mellon would serve as custodian for the fund
- Bitcoin traded near $7,500 on the day of the filing
Third Time’s the Charm?
The June 6 filing represented VanEck’s third effort to bring a Bitcoin ETF to market. The firm first filed for an ETF based on Bitcoin futures in August 2017, but withdrew the application in September at the request of SEC staff, since the underlying futures contracts did not yet exist. A second attempt coincided with the launch of Bitcoin futures on CME and Cboe in December 2017, but that application was also withdrawn in January 2018 after SEC staff raised concerns.
This time, the approach was fundamentally different. Rather than relying on futures contracts, the VanEck SolidX Bitcoin Trust would hold actual Bitcoin, providing direct exposure to the cryptocurrency’s price movements. The structure addressed one of the SEC’s primary objections to previous filings: the disconnect between futures prices and the underlying asset.
SolidX CEO Daniel H. Gallancy told CNBC that if all regulatory filings proceeded according to plan, the ETF could launch by the first quarter of 2019. The high per-share price of $200,000 was intentional, reflecting the fund’s focus on institutional investors who could absorb significant exposure to Bitcoin’s notorious volatility.
A New Pricing Approach: OTC Index
One of the most innovative aspects of the filing was the proposed pricing methodology. Rather than tracking Bitcoin prices from electronic cryptocurrency exchanges — which had been criticized for manipulation and inconsistent pricing — the ETF would follow an index from MVIS, a VanEck subsidiary, based on over-the-counter (OTC) trading data.
The OTC approach was designed to address the SEC’s longstanding concerns about the reliability of cryptocurrency exchange prices. In January 2018, the commission had raised specific objections about extreme price volatility and the ability for customers to withdraw funds easily from crypto exchanges. By anchoring the fund’s valuation to OTC trades, VanEck and SolidX hoped to demonstrate that Bitcoin pricing could be both reliable and resistant to manipulation.
“I believe that Bitcoin has emerged as a legitimate investment option, as a type of ‘digital gold’ that may make sense for investors’ portfolios,” said Jan van Eck, chief executive officer of VanEck, in a statement accompanying the filing. “A properly constructed physically-backed Bitcoin ETF will be designed to provide exposure to the price of Bitcoin, and an insurance component will help protect shareholders against the operational risks of sourcing and holding Bitcoin.”
Institutional Infrastructure Takes Shape
The filing outlined a robust institutional framework. Bank of New York Mellon would serve as the fund’s custodian, providing the kind of traditional financial infrastructure that regulators had been looking for. VanEck would handle marketing and distribution, while SolidX would sponsor the product and create the underlying index.
This institutional scaffolding reflected a broader trend in the cryptocurrency market during mid-2018. As retail interest waned amid a prolonged bear market — Bitcoin was down roughly 50% year-to-date — institutional players were quietly building the infrastructure for mainstream crypto adoption. The VanEck-SolidX filing was part of this larger shift, joining other institutional-focused developments like Coinbase’s acquisition of broker-dealer Keystone Capital on the same day.
The Bitcoin market had been trading within a relatively narrow range for several weeks leading up to the filing. Bitcoin was priced near $7,500 on June 6, with Ethereum at approximately $607 and the total cryptocurrency market capitalization around $285 billion, according to CoinMarketCap data. Bitcoin Cash traded at $1,131, while XRP sat at $0.67 and EOS at $13.94.
A Long Regulatory Road
The VanEck-SolidX filing faced significant regulatory hurdles. The SEC had previously rejected multiple Bitcoin ETF proposals, including the Winklevoss twins’ application for a similar physically-backed fund in March 2017. The commission had also rejected SolidX’s own earlier application for an exchange-traded product based on physical Bitcoins around the same time.
SEC Chairman Jay Clayton had articulated a cautious approach to crypto regulation in a CNBC interview the same day as the filing, stating that the agency would not change its traditional definition of a security. The regulatory environment remained uncertain, with the SEC simultaneously taking steps to strengthen oversight — including appointing Valerie Szczepanik as its first Senior Advisor for Digital Assets and Innovation just days earlier.
Despite the challenges, the VanEck-SolidX partnership brought together significant financial expertise and institutional credibility. VanEck managed billions in traditional assets, while SolidX had been working on Bitcoin financial products since 2014. Their combined resources suggested that the push for a Bitcoin ETF was evolving from a speculative endeavor into a serious institutional initiative.
Why This Matters
The VanEck SolidX Bitcoin Trust filing represented a critical milestone in the journey toward a regulated Bitcoin ETF. By targeting institutional investors with a physically-backed product priced at $200,000 per share and anchored to OTC pricing data, the filing directly addressed many of the SEC’s previous objections. While approval would prove elusive for years to come, the June 6, 2018 application established a template that would eventually lead to the spot Bitcoin ETF approvals of 2024. The filing also underscored a broader shift in the cryptocurrency market: as retail enthusiasm faded during the 2018 bear market, institutional players were laying the groundwork for the next phase of crypto adoption.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.