Sarah Tran
Independent Analyst
- Investment firm VanEck has recently filed a draft prospectus for a Bitcoin-related mutual fund with a US regulator.
- In the wealth manager’s filing with the Securities & Exchange Commission, VanEck acknowledged the possible risks involved.
- The fund manager has yet to hear a decision from the SEC of its Bitcoin ETF filing that has been delayed twice.
Wealth manager VanEck has filed a prospectus with the United States Securities & Exchange Commission (SEC) to launch the Bitcoin Strategy Fund.
VanEck warns of risks associated with Bitcoin
This new prospectus filed with the securities regulator states that the fund will acquire Bitcoin exchange-traded products and futures.
The fund manager will invest in Bitcoin futures contracts and use the CME CF Bitcoin Reference Rate (BRR) while also investing in pooled investment vehicles that directly and indirectly invest in the leading cryptocurrency.
The new crypto fund, introduced as the investment manager as the “Bitcoin Strategy Fund,” will have its share price fluctuate with the changes in the market value of its portfolio securities.
In addition, VanEck stated that it would not acquire Bitcoin directly due to the risks involved with the cryptocurrency markets. The fund manager said that the fund would not invest in other digital assets directly either. The filing states:
“The value of Bitcoin and, therefore, of the fund’s Bitcoin-related investments could decline rapidly, including to zero. You should be prepared to lose your entire investment.”
The global investment manager filed the registration on June 21, and in addition to the Bitcoin-related investments, the fund will also have significant holdings of cash and fixed-income investments.
VanEck also added that the fund’s risks are not only limited to the bellwether cryptocurrency but also the risks involved with pooled investment vehicles, target exposure and rebalancing, borrowing and leverage, tracking errors, credit issues and interest rate discrepancies.
The fund manager has yet to receive an outcome on the decision from the SEC of its exchange-traded fund (ETF) registration. Earlier this month, the securities regulator delayed making a decision on the VanEck Bitcoin Trust for the second time.
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