VanEck and Bitwise said the two investment firms are building their own Bitcoin ETFs worth $72.5 million and $500,000, respectively, according to S-1 documents filed with the Securities and Exchange Commission on Monday.
S-1 forms reveal important information to the financial regulator, such as a company’s business model, financial statements, details about the management team, and any legal or competitive risks.
Seed capital, or seed capital, refers to the money provided to launch an exchange-traded fund (ETF). While banks and brokers often provide the initial capital, ETFs can seed themselves with new capital or existing assets, as in this case.
In addition to the $500,000 seed basket, Bitwise — which claims to be America’s largest cryptocurrency index fund manager — is offering a $200 million investment opportunity, with investment firm Pantera Capital among the potential purchases.
“Pantera Capital Management LP, through one or more of its investment funds, has indicated an interest in purchasing up to $200 million of shares in this offering from accredited participants or in the market through broker-dealers,” Bitwise said. “However, since indications of interest are not binding agreements or commitments to purchase, these potential buyers can decide to purchase more, less, or no shares.”
Founded in 1955, New York-based VanEck is a global investment and asset management firm focused on ETFs, mutual funds and account management for institutional investors. According to VanEck, the company began developing ETF products in 2006.
In 2017, VanEck launched the Bitcoin Futures ETF, but, like others, it has yet to see a place in an SEC-approved Bitcoin ETF. Something the company and the cryptocurrency market hope will change this week.
The Bitwise and VanEck applications are just two of many reviewed by the SEC this week. In December, Bitwise released an ad for a Bitcoin ETF featuring “the most interesting man in the world” Jonathan Goldsmith.
While the cryptocurrency space sees ETFs as Bitcoin’s and Ethereum’s potential opportunity for great success, Bitwise and VanEck, in their own filings, have warned investors of the potential risks of investing in Bitcoin ETFs.
In its filing, VanEck warned that the investment could reach zero.
“The value of Bitcoin, and therefore the value of the Fund’s shares, could decline rapidly, including to zero. You may lose your entire investment,” Van Eck said. “The shares are neither insured nor guaranteed by the Federal Deposit Insurance Corporation, or any other government agency or Any other person or entity.”
“The further development and acceptance of Bitcoin and other digital asset networks, which represent a new and rapidly changing industry, is subject to a variety of factors that are difficult to evaluate,” Bitwise wrote. “A slowdown or halt in the development or acceptance of the Bitcoin network could negatively impact equity investment.”
In a Monday post on Twitter, SEC Chairman Gary Gensler warned investors about the potential risks of investing in cryptocurrencies.
“Investments in crypto assets can also be exceptionally risky and often volatile,” Gensler said. “A number of major platforms and crypto assets have become insolvent and/or lost value. Investments in crypto assets remain subject to significant risks.”
Edited by Ryan Ozawa.