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As Bitcoin Falls 5%, The Vaneck Bitcoin Futures ETF Ends Its First Day With $9.6 Million Under Management

The VanEck Bitcoin Strategy ETF (XBTF), which tracks the price of Bitcoin futures, debuted today in the midst of market instability that saw Bitcoin’s price fall below $60,000 for the first time in two weeks.

Bitcoin’s price recovered little, reaching $59,966 by the time traditional markets closed at 4 p.m. ET.

 

During that time, VanEck’s XBTF had 38,398 shares traded on its debut day, ending at $59.73 per share–just below its opening price of $60 per share. According to VanEck, the ETF had $9.6 million in assets under management at the end of the day.

 

VanEck’s debut is bittersweet, as the SEC declined its spot market Bitcoin ETF proposal on Friday, citing persistent worries about “fraud and manipulation” in the cryptocurrency market. Since 2017, the application has been awaiting a decision from the regulator.

“Obviously, we were disappointed to hear about the decision on the spot physical product and we still continue to view that as the superior product,” Kyle DaCruz, director of digital asset products at VanEck, told Decrypt on Tuesday afternoon. “However, in light of that decision, we felt it important–and frankly we’re excited–to bring to market Bitcoin-linked exposure to investors in a regulated exchange traded fund.”

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Whereas spot prices are concerned with an asset’s current value, futures contracts are agreements to purchase the asset at a later date, sometimes months later, at a fixed price. DaCruz went on to say that VanEck intends to keep working on bringing a spot product to market, but he couldn’t comment on when that might happen.

For the time being, its Bitcoin futures ETF is up against two rivals.

The Proshares Bitcoin Strategy ETF (BITO), the first Bitcoin futures ETF to be approved by the SEC, amassed a record-breaking $1.1 billion in its first two days of trading and has since remained stable at $1.05 billion. The Valkyrie Bitcoin Strategy ETF (BTF), which debuted three days later, currently manages around $50 million.

According to DaCruz, the VanEck ETF has two benefits over its competitors: Lower costs of 0.65 basis points compared to 0.95 basis points imposed by BITO and BTF, as well as a C-Corp structure that permits it to carry forward losses. That is, if the ETF has losses at the end of the year, they can be carried forward and subtracted from the following year’s earnings, allowing investors to leverage past losses to decrease the taxes they pay on future gains.

He was careful to point out that a C-Corp is not always the best structure for ETFs. The majority are organised as regulated investment companies, or RICs. Rather, VanEck believes it is a suitable fit for Bitcoin-related products, particularly given the volatility of the cryptocurrency.

“The capacity to treat losses and carry them forward and backwards is critical in this asset class,” DaCruz explained. “And so, when a RIC has a bad year, there’s nothing you can do about it.” However, a C-Corp can carry those losses forward five years or back three years to offset gains.”