VanEck Explains What ETFs Bring to Bitcoin

Siamak Masnavi

On 9 November 2018, VanEck's Director of Digital Asset Strategy, Gabor Gurbacs, spoke with Jill Malandrino, the host of TradeTalks, Nasdaq's #1 live social media show, and explained what ETFs bring to Bitcoin (and the crypto space in general).

In this interview, Gurbacs, whose firm has made a Bitcoin ETF proposal (VanEck SolidX Bitcoin Trust) to the U.S. Securities and Exchange Commission (SEC), started by saying that when they think about digital assets at VanEck, they think about "integrating digital assets into the established capital markets", and that "one of the most established liquid and transparent vehicles are ETFs," and so they were "trying to find a way in which to use that vehicle to enable investors to benefit from it." 

He then listed the benefits that ETFs bring to Bitcoin:

  • Liquidity: "the liquidity that is brought through the authorized participant system, in general the ETF ecosystem"
  • Price Discovery: "ETF are often price-based on established and regulated price series, like what we do at MVIS over in Frankfurt."
  • Established Capital Market Structure
  • Compliance with global regulations

"Today, millions of Americans sort of invest in Bitcoin. We just want to provide a better and more secure way to enable Americans to own Bitcoin... From the feedback we are getting, it is fairly clear to me that America wants a Bitcoin ETF."

Malandrino then asked Gurbacs why it has been so difficult to get a Bitcoin ETF proposal approved by the SEC. He replied:

"I think it's because the market is fairly new. So, the regulators want a walk before we run. And so, we've been working for a while now on providing an explanation for why our pricing methodologies are appropriate, why there are already good enough custody solutions like Fidelity coming into the space and providing custody solutions is a big deal, and from the investment side, large endowments like Yale... are already in the space, and they've expressed a desire to invest in a way they're used to investing in equities and commodities."

He then went on to say that although his firm is still waiting for a decision from the SEC, he remained positive:

"I'm positive. I actually think that digital assets have the potential in the next two decades to become a $10 trillion industry... I think the change we're going to see in the digital asset space is going to be very rapid. For ETFs to go from 0 to $3.5 trillion, it took about 20 years. I think for digital assets to get to that level, it will take 10 years, and to get to $10 trillion, it's going to take about 20 years."

 

Featured Image Courtesy of VanEck