VanEck’s ETF vs. Bakkt’s Future Contracts

VanEck’s ETF vs. Bakkt’s Future Contracts

After a long debate over Bitcoin ETFs in the last three years, while the U.S. Securities and Exchange Commission (SEC) has postponed several previous ETFs, VanEck and SolidX aims to launch “limited version” of a bitcoin exchange-traded fund (ETF).

On the other hand, last week another mega news for crypto enthusiasts reported that Intercontinental Exchange’s new Bakkt subsidiary would launch its Bitcoin futures on 23 September by securing a charter from the New York State Department of Financial Services (NYDFS).

From fundamental perspectives, crypto market experts believe that these two remarkable news results in higher volatility in Bitcoin and altcoins price.

Bitcoin ETF Commence Sept. 5

Investment management firms VanEck Securities Corp. and SolidX Management want to start selling shares in a limited version of Bitcoin exchange-traded fund (ETF) to institutional investors.

According to the Wall Street Journal, the investment management firms are planning to launch selling shares in an ETF-like platform on Sept. 5 under the United States Securities and Exchange Commission’s (SEC) Rule 144A. This Rule exempts the shares from securities registration and allows the sale of privately placed securities to qualified institutional buyers.

VanEck and SolidX use the SEC’s exemption to offer shares of their VanEck SolidX Bitcoin Trust to institutions such as banks and hedge funds, but not retail investors. By selling shares in a limited version of Bitcoin ETF, VanEck and SolidX hope to show that a bitcoin ETF can work.

Since 2018, the SEC has delayed making a decision on VanEck and SolidX Partners request listing a Bitcoin ETF several times. Citing concerns over fraud and manipulation, the SEC postponed once again its decision on three Bitcoin ETFs, including VanEck SolidX, Bitwise Asset Management and Wilshire Phoenix.

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Bakkt Futures and Custody platform launches Sep. 23

Beside Bitcoin ETF, crypto enthusiasts amazed last week with the Bakkt surprise. The Intercontinental Exchange-backed bitcoin futures provider announced in a tweet that on Sept 6, its “Warehouse will begin offering secure storage of customer bitcoin to prepare for the launch of Bakkt Bitcoin Daily & Monthly Futures when they launch on Sept 23.”

According to Bakkts tweeter page, these contracts will enable physical delivery of bitcoin with end-to-end regulated markets and custody.

On Aug. 16, in a blog post Bakkt had announced that after receiving approval from the necessary regulators, the company will launch its much-anticipated platform for daily and monthly futures in the United States.

Bakkt will offer customers a regulated, physically-settled bitcoin futures product, including bets on bitcoin’s price at some future date. Despite cash-settled futures contracts, like what CME offers, customers receive the actual bitcoin they bet on when a contract expires.

Bakkt had initially announced its launch August 2018. Trying to receive the Commodity Futures Trading Commission (CFTC) approvals, the company delayed its lunch. They began testing in earnest and have hosted numerous events.

VanEck’s ETF vs. Bakkt’s Future Contracts

Bitcoin futures contracts have made several impacts on the cryptocurrency’s price and are always interesting for crypto investors to keep an eye on.

Bitcoin futures were first listed on the CBOE at the height of the bull market on 10 December 2017. Futures trading activity, however, remained dull through 2018, courtesy of the crypto bear market.

Based on all of the Bitcoin futures products being released in the past two years, it seems very few people actively care about these products at this stage. But you should bear in mind that In Dec. 2017, when the bitcoin price was on a bull-run after launching CBOE and CME futures contracts most of the cryptocurrency analysts, believes that these two future contracts less than a week triggred off the famous late 2017 slump due to a large number of bitcoin short positions on these two newly introduced futures platform.

So, what will be the market response to Bakkt’s products? As the company will also support the ICE Futures, there is a chance things could get a lot more effective once everything has gone live accordingly.

Furthermore, VanEck and SolidX are planning to start selling “limited version” of a bitcoin ETF on Sept. 5 under the SEC, Rule 144A.

But there is a significant difference between the real and “limited edition” of ETF, which we could say that this limited edition ETF is a marketing strategy to make a stepping stone for a genuine Bitcoin ETF; however we should not underestimate this platform effect on the market.

As Jake Chervinsky, Compound Finance general counsel said the “limited ETF” cannot be considered as a full ETF and is merely an alternative to existing investment vehicles.

As a result, these two remarkable news will cause greater volatility in the crypto market according to the market response to this kind of fundamental events, so fasten your seat belt and be ready for an adventurous journey.

“VanEck and SolidX are planning to start selling “limited version” of a bitcoin ETF on Sept. 5 under the SEC, Rule 144A. “