VanEck To Launch Bitcoin Futures ETF On Nov. 16
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VanEck To Launch Bitcoin Futures ETF On Nov. 16

8 months ago

The VanEck Bitcoin Strategy ETF will charge a 0.65% fee, compared to the 0.95% charged by ProShares and Valkyrie.

VanEck To Launch Bitcoin Futures ETF On Nov. 16

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In what could well mark the beginning of a "brutal" price war in the fledgling cryptocurrency exchange-traded fund industry, VanEck announced that it will launch its Bitcoin futures-based ETF on Tuesday, November 16. 

The VanEck Bitcoin Strategy ETF (XBTF) will list on the Cboe commodities exchange with a 65-basis-point fee — nearly one-third below what the two existing Bitcoin ETFs charge.

The announcement came just days after the U.S. Securities and Exchange Commission shot down its application for a physically settled Bitcoin ETF — one which is based on a basket of actual BTC rather than Bitcoin futures contracts, citing concerns about fraud and price manipulation in the Bitcoin market.

The VanEck Bitcoin Strategy ETF's management fee of 65 basis points — 0.65% — compares with the 95-basis-point fees charged by the ProShares Bitcoin Strategy ETF (BITO) and Valkyrie Investments' Bitcoin Fund (BTF).
VanEck was pretty open about starting a price war, titling its press release "Lowest Cost Bitcoin-Linked ETF to Launch on November 16."
ProShares launched first, on Oct. 19, and saw $1 billion traded on its first day alone. 
When VanEck announced the plan on October 25, ETF Store President Nathan Geraci told the Financial Times, that while "BITO has already accrued a huge advantage as first mover… at the end of the day, Bitcoin futures ETFs are commodity products. Costs matter and I expect a brutal fee war to play out in this category. [This] is the opening salvo in what will be a ruthless, ongoing fee competition."

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The Future is Now

On November 12, the SEC turned down the physically backed VanEck Bitcoin Trust ETF, saying the company hadn't proved to the commission's satisfaction that its structure would "prevent fraudulent and manipulative acts and practices" or sufficiently "protect investors and the public interest."

That was expected, as newly appointed SEC Chairman Gary Gensler had made fairly clear that he preferred futures-based Bitcoin ETFs, which he feels are harder to manipulate.

Among the seven concerns the SEC had about the Bitcoin market's price integrity were "wash" trading, price manipulation by "whales" with extremely large holdings, and the hacking of Bitcoin exchanges.

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