NEW YORK (Reuters) – Investment firm VanEck and financial technology company SolidX Management LLC will sell shares in their proposed bitcoin exchange-traded fund to “qualified institutional buyers,” the companies said on Tuesday, in a move aimed at further attracting institutional money into the cryptocurrency segment.
The new bitcoin-based ETF is still awaiting approval from the U.S. Securities and Exchange Commission. The agency has yet to approve a bitcoin ETF.
As cryptocurrencies start to gain broader acceptance, some institutional investors – from trading firms to hedge funds – are seeking exposure to the asset class. Some are buying bitcoin futures, seen as a way to gain exposure without risking the hacks and heists that have plagued the digital currency sector.
The planned ETF shares, under the VanEck SolidX Bitcoin Trust, will provide institutional investors access to a physically backed bitcoin product tradable through traditional and prime brokerage accounts, Van Eck and SolidX said in a statement.
The shares will be sold under Rule 144A of the Securities Act. The rule modifies the SEC restrictions on trades of privately placed securities, allowing these investments to be traded among qualified institutional buyers.
The shares can be quoted on OTC Link ATS, an SEC-regulated alternative trading system, starting this Thursday. An ATS, which matches orders for buyers and sellers of securities, is not a national securities exchange, but may apply to the SEC to become such.
VanEck and SolidX said they continue to work on being able to offer a registered product.
In the event the SEC approves the bitcoin ETF’s registration, the 144A issued Shares may benefit from public market resales, the companies said.
“Institutional demand for bitcoin exposure is uncertain, because institutional quality vehicles simply have not, to this point, been readily available,” said Jan van Eck, chief executive officer at VanEck.
“We’re introducing a solution for institutions that fits within their operational processes and the current regulatory framework.”