VanEck buys 1,640 BTC for $72.5M to seed ETF, holdings up over $1M before trading

VanEck is heating up the competition by seeding its potential spot Bitcoin exchange-traded fund (ETF) with a substantial $72.5 million, according to the amended S-1 form filed on Jan. 8.

The move is part of a broader strategy among various asset managers who are vying for the attention of investors through competitive fee structures and strategic investments.

VanEck buys 1,640 BTC

VanEck’s filing showed that the company purchased Bitcoin worth $72.5 million on Jan. 5, which equates to 1,450,000 shares at a per-share price of $50.00. In total, the trust received 1,640.92489329 Bitcoin.

These Seed Creation Baskets were delivered on Jan. 5. The fund’s BTC holdings are worth $73.8 million as of press time on Jan. 8.

Additionally, Bitwise‘s amended S-1 filing on the same day revealed that Pantera Capital is the investor behind its $200 million seed fund. Bitwise itself has put up $500,000 for its proposed ETF with $500,000. Pantera’s commitment is not binding and is contingent on the SEC’s approval of the ETF.

Meanwhile, BlackRock and Fidelity have announced significantly smaller $10 million and $20 million seed funds for their respective ETFs. BlackRock purchased 227.9 BTC on Jan. 5, according to its latest filing. It is unclear whether Fidelity has also purchased the Bitcoin for its ETF.

In comparison, the high amounts of BTC VanEck and Bitwise put forth are a precursor to fierce competition between these fund managers once these products launch.

Competition heating up

The competitive nature of the ETF landscape is further evident in the diverse fee structures proposed by various firms.

Ark Invest and 21 Shares announced today that they have cut their fees from 0.8% to 0.25%, additionally offering a waiver on these fees for the first six months or until the first $1 billion is reached. Similarly, VanEck has also set its fee at 0.25%.

In a different approach, BlackRock has introduced a fee structure that begins at 0.2% for the first 12 months or for the initial $5 billion in its exchange-traded fund (ETF), after which it will rise to 0.3%.

Meanwhile, Bitwise is implementing a no-fee policy for its first six months before transitioning to a 0.24% fee. Other asset managers, including Wisdomtree, Invesco Galaxy, Fidelity, Valkyrie, Hashdex, and Franklin Templeton, have fees ranging from 0.39% to 0.9%.

Grayscale currently has the highest fee at 2% but plans to reduce it to 1.5%, according to its amended S-1 filing.

These varied fee offerings reflect each firm’s strategy to attract investors in a market increasingly acknowledging cryptocurrencies as a legitimate and attractive asset class.

Approval of these spot Bitcoin ETFs could herald a new era of mainstream crypto investment, offering a regulated investment vehicle that aligns with traditional asset classes. This would likely attract institutional and retail investors, funneling billions of dollars into digital assets and possibly driving higher prices.

However, it’s important to note that the approval of these ETFs is not guaranteed. The SEC has historically been cautious about cryptocurrency-related products, citing concerns about market risks such as fraud and manipulation. Yet, the changing regulatory climate and increased interest from major financial players suggest that approval may be on the horizon.

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