Bakkt and VanEck/SolidX saw their first institutional investments over the last few days to mark a step forward in big money officially entering the crypto space. Bakkt’s physically-backed futures platform has been long-awaited and much hyped, while the VanEck/SolidX ETF Trust has been something of a last-minute surprise – so much so that it fooled many into thinking that it was an actual Bitcoin ETF. With Bakkt’s “Bitcoin warehouse” now accepting the digital gold and the VanEck/SolidX ETF Trust receiving its first investors, big money can finally get its hands on some Bitcoin. But will it?
Bakkt Opens the Warehouse Doors
Bakkt’s Bitcoin warehouse opened its doors at the end of last week, accompanied by a series of tweets, articles, and interviews detailing the purpose and workings of the service. In a Medium post celebrating the launch, which was first mooted over a year ago to huge excitement within the crypto community, Bakkt COO Adam Smith stated that the company’s enterprise-grade storage solution, which is protected by a $125 million insurance policy and regulated by the New York State Department of Financial Services (NYDFS), “represents a milestone” in Bitcoin and cryptocurrency in general, with the warehousing facility built “using the same institutional grade infrastructure, operational controls, and security protections” as the world’s leading traditional financial markets. While institutional customers can now send their BTC to Bakkt they can’t yet trade it – the futures platform is launching later this month, at which point we will get a much clearer idea of how tempting Bakkt’s offer is to Wall Street.
Today our Warehouse opens for customer bitcoin deposits and withdrawals as we prepare for the Bakkt Bitcoin Daily & Monthly Futures, launching September 23
The availability of physical delivery brings more flexibility in managing bitcoin exposure
— Bakkt (@Bakkt) September 6, 2019
VanEck Bitcoin Trust Launches with a Whimper
VanEck/SolidX launched their Bitcoin Trust the day after Bakkt opened their warehouse, and the lack of hype surrounding the surprise announcement was evident in the low level of initial level of investment as the platform was mocked for only issuing ₿4 within the first three days, perhaps being undermined after being labelled ‘ETF-Lite’ on social media.
Three days after launch, the VanEck bitcoin trust for institutional investors has reportedly managed to issue a whopping 1 (one) basket. It has 4 bitcoins or $41,400 in assets under management. Massive. pic.twitter.com/TUePbLVqBi
— Alex Krüger (@krugermacro) September 10, 2019
The product is seemingly as an attempt to offer almost all the functionality of a Bitcoin ETF without having to jump through the hoops associated with launching a fully-fledged one, hoops that VanEck/SolidX know only too well following months of delays and negotiations with regulators on the subject. The pair have used a Securities and Exchange Commission (SEC) exemption that allows shares in the Trust to be offered to institutions such as hedge funds and banks but not to retail investors, with the result that the product is very similar to an ETF. In principle however, it does allow institutions the opportunity to invest in Bitcoin, although whether the lack of initial investment is down to lack of publicity or lack of appetite among the big players remains to be seen. VanEck, SolidX, and Bakkt have staked their reputations, and a lot of money, on it being the former.