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Clash Of Heads At US Money Manager As It Files For Bitcoin ETF
Earlier this year, the US Securities and Exchange Commission rejected an application for an exchange-traded fund that would have tracked a bitcoin exchange.
New York-based money manager VanEck has filed for an actively-managed exchange-traded fund with investments in derivatives linked to bitcoin, just days after one of its portfolio managers touted the crypto-currency as a “fad”.
If approved by the US Securities and Exchange Commission, the fund would essentially invest in futures contracts and trade on the Nasdaq.
“Performance of the fund is determined by the price movement of the underlying digital asset (i.e bitcoin), the rate of change and the change in volatility,” the filing said.
VanEck’s application was filed less than a week after Joe Foster, portfolio manager and strategist for its flagship International Investors Gold Fund, voiced his skepticism about bitcoin.
He described bitcoin and crypto-currencies generally as a “fad”, and said bitcoin would likely never “replicate or replace” gold as a safe haven asset.
“At best, digital currencies [crypto-currencies] may eventually occupy some middle ground as a niche product,” Foster said. “At worst, they become a failed experiment that ends in tears.”
Bitcoin was spawned in 2009 out of distrust for big banks and an incline for deregulation and decentralization. Since its inception, when a single bitcoin would have cost just a few cents, the crypto-currency has gathered unprecedented momentum, and earlier this week reached a record-high of $4,483 per coin.
Unlike a generic ETF, VanEck’s fund seeks to “provide total return” without tracking the performance of a specific index. Derivatives like futures allow investors to bet on potential gains or losses in bitcoin’s price without actually holding any themselves.
Many crypto-currency enthusiasts have said bitcoin is “digital gold”, despite the price of one coin being triple that of an ounce of the precious metal. Some have suggested that a small portion of gold’s roughly $7.5 trillion market share will flow into bitcoin, which would drive up the crypto-currency’s price.