VanEck SolidX bitcoin trust to sell shares to institutional buyers

NEW YORK (Reuters) – Investment firm VanEck and financial technology company SolidX Management LLC will sell shares in their bitcoin trust to “qualified institutional buyers,” the companies said on Tuesday, in a move aimed at further attracting institutional money into the cryptocurrency segment.

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 as a way to gain exposure without risking the hacks and heists that have plagued the digital currency sector.

The 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, VanEck and SolidX said in a statement.

The shares will be sold under Rule 144A of the Securities Act. The rule modifies the U.S. Securities and Exchange Commission 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.

The bitcoin-based asset is similar to an exchange-traded fund.

“The offering allows for shares to be created and redeemed like ETFs, but it is not an ETF,” Ed Lopez, head of ETF Product for VanEck, said in an emailed statement to Reuters. “Unlike an ETF it isn’t listed on a national exchange, rather it is quoted on the OTC Link ATS platform.”

VanEck and SolidX together with financial markets exchange Cboe filed a proposal with U.S. regulators to list a bitcoin-based ETF product in January. An SEC decision on that has been delayed. Meanwhile, the two companies said they continue to work on launching a registered product.

In the event the SEC approves the earlier bitcoin ETF 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.”