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Investment firms Van Eck and SolidX, two firms behind a Bitcoin ETF proposal currently before the SEC, have given up waiting on the SEC to authorize their Bitcoin ETF, and are now moving ahead with an alternate solution.
Van Eck and SolidX will begin selling shares in a limited version of a Bitcoin ETF, available only to “qualified institutional investors” on Thursday, reports The Wall Street Journal.
The firms reportedly will use a workaround found in a subsection of the 1933 Securities Act affectionately called 17 CFR § 230.144A - Private resales of securities to institutions. This clause allows the sale of privately placed securities among qualified institutional buyers without requiring SEC registration or approval.
While the deadline for an SEC decision on the retail version of the Van Eck SolidX Bitcoin Trust ETF isn’t due until October 18th, by using 144A, Van Eck and SolidX hope to demonstrate the institutional demand for such a product. Van Eck and SolidX told the Journal they hope this limited version will prove a Bitcoin ETF can work.
The private offering will allow institutional investors to gain exposure to Bitcoin without the need to take custody of the asset and without the risk of loss or theft, since the trust is insured.
The Journal noted that this exemption has not been used in this way before, suggesting the two companies may be heading into uncharted territory. The SEC has not yet responded to the proposal.
But perhaps, that’s because it isn’t really an ETF. In response to the news, Crypto lawyer Jake Chervinsky tweeted, “This is misleading. The VanEck SolidX Bitcoin Trust is not an ETF. It looks exactly like the Grayscale Bitcoin Trust, which was launched almost six years ago. Calling this a ‘limited ETF’ is a cute marketing strategy, but that's about it. Calling it a full ETF is just wrong.”