VanEck cuts costs for its bitcoin ETN in half

Asset manager VanEck has lowered the total expense ratio (TER) for its VanEck Vectors Bitcoin ETN from 2.0 per cent to 1 per cent per year. 

Launched in November 2020, the ETN offers investors the opportunity to benefit from the performance of bitcoin in an exchange-traded and regulated manner without having to buy it themselves. The performance of the VanEck Vectors Bitcoin ETN mirrors the performance of the MVIS CryptoCompare Bitcoin VWAP Close Index, the price of which is directly linked to the Bitcoin price. 

By February 2021, less than three months after its launch, the VanEck Vectors Bitcoin ETN had already surpassed USD100 million in assets under management. 

“We are seeing a lot of interest on the investor side in our Bitcoin ETN,” says Martijn Rozemuller, head of Europe at Van Eck. “By reducing costs, we aim to pass on the positive economies of scale achieved through rapid growth to customers, allowing them to participate more directly in the performance of Bitcoin in the future via exchange-traded product.” 

Thanks to the regulated structure, investors can use an ETN product to invest in Bitcoin just like trading stocks or ETFs. This means that you do not need a wallet, as is usually the case with cryptocurrencies, in which bitcoins are stored on a blockchain outside the rest of the portfolio. The VanEck Vectors Bitcoin ETN is fully invested in bitcoin. Only bitcoins are purchased with the money invested in the ETN, so each ETN share represents a real share of Bitcoin. 

To increase the security of the bitcoin, VanEck relies on Bank Frick, a custodian regulated in the EEA country of Liechtenstein, where the Bitcoins are kept in what is called “cold storage”. However, a loss, for example due to hacking attacks, can never be completely ruled out. Bank Frick is one of the European pioneers in the integration of crypto currencies in the regulated banking environment. 

Despite all the benefits, investing in bitcoin and bitcoin products comes with a lot of risk. Bitcoin investors should be able to assess certain risks such as technology risk or high volatility before investing in bitcoin.