VanEck is an internationally active investment company known for its exchange traded index funds (ETFs). VanEck was one of the first financial institutions to try to make Bitcoin tradable via classic securitised financial products. In an interview with Dominik Poiger, portfolio manager at VanEck, we learned how institutional investors feel about Bitcoin, why there is a market for securitised crypto-financial products despite regulated token custody solutions and whether security tokens will become a new standard before the end of this decade.
The interview was first published in the October issue of Kryptokompass.
How does a portfolio manager at a large investment company such as VanEck get to grips with crypto currencies, especially Bitcoin?
I was like many others in the industry: the interest was mainly driven by the development of the Bitcoin share price. But with regard to product development, the interest only really deepened at VanEck. BTC-ECHO also regularly reports on the efforts of its US colleagues to launch a Bitcoin ETF. The colleague in charge of the project was also in Germany for three months in 2017 – since then, there has been a lively exchange of information. As a small company, we are also relatively flexible when it comes to product development. By the way, in our report „The Investment Case for Bitcoin“ we show why BTC has earned its place in a traditional securities portfolio.
You often hear the statement: „Institutional investors are pushing into the crypto-market“ to create a positive mood for crypto-currencies. To what extent do you agree with this statement or to what extent do you relativise it?
There is no getting around it. Since the creation of Bitcoin, it has become clear that the crypto currency belongs in a classic securities portfolio. What is missing, however, are the so-called onramps for institutional investors. We as a company have therefore also made it our business to build exactly this infrastructure to pave the way for institutional investors.
Can you tell us something about your customers, how they take up the topic of crypto currencies?
Especially in view of the US launch of the ETF there is a lot of interest from investors. As soon as the media starts talking about crypto-ETFs, the name VanEck is usually mentioned. In this respect, we are definitely on the radar of investors.
Do you think that the trend of traditionally securitised financial products will continue?
Institutional investors have to keep their crypto-currencies of Crypto Nation Pro somewhere. But if you as an individual investor do not want to build up your own custody infrastructure, you cannot avoid a financial vehicle in the medium term.
But there are now also BaFin-regulated depositaries that allow direct investment in Bitcoin and Co.
Right. I think this is a positive market development. We like to compare Bitcoin to gold. Also in the gold market, many investors tend to invest in a gold ETF or mining shares. Investor preferences are simply different and so different products are needed to match those preferences.
So far, the US Securities and Exchange Commission (SEC) has rejected all publicly tradable Bitcoin ETFs, including yours. When do you think the first approval will be granted?
Our experience is that our colleagues in the USA have invested a lot of time and energy in training the SEC on crypto-currencies. At some point there will certainly be a Bitcoin ETF, when that will be is hard to say. In any case, we will keep at it and try to set up a Bitcoin ETF.
But haven’t the conditions been met in the meantime?
Yes, the essential requirements have already been met. Germany in particular has seen some positive developments in recent months. The regulatory course for such a financial product has therefore been set.
Detached from crypto-currencies like Bitcoin or Ether. Do you think that tokens will prevail as a security medium, keyword security tokens, over documentary securitisation in the next ten years?
Ten years is probably too short a period for a transformation of this kind. But I do think that the financial sector will end up in the way you describe. The entire value chain can be optimised through tokenisation – be it equities, bonds or real estate. Now „only“ the regulatory shell needs to be created. It will therefore take quite a long time before the ecosystem is geared to producing tokenised value assets. But almost everyone in the industry is aware that this is the future.