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On January 15, 2024, renowned asset manager VanEck submitted an application to the US Securities and Exchange Commission (SEC) for the approval of the Onchain Economy ETF.
According to the filing, the Onchain Economy ETF will primarily target companies and instruments related to the crypto economy without directly investing in cryptocurrencies. The firm’s head of digital assets research, Matthew Sigel, revealed that the fund aims to allocate at least 80% or more of its assets to firms working to transform digital asset instruments.
The Onchain Economy ETF Will not Invest in Crypto Directly
In their filing to the SEC, VanEck explained that the Onchain Economy ETF would invest in digital transformation companies such as software developers, cryptocurrency exchanges, crypto mining firms, payment processors, infrastructure providers, and other businesses offering services in the emerging crypto industry.
The project will also target any firm that holds significant crypto assets or generates any form of revenue from crypto investments. The company maintained that “The Fund does not invest in digital assets or commodities directly.”
Besides the new Onchain Economy ETF, VanEck has been busy filing other crypto exchange-traded funds (ETFs). Last November, the asset management firm filed a proposal at the Chicago Board Options Exchange for a Solana ETF after previously filing applications with the SEC.
Nonetheless, in a step that most people never saw coming, VanEck shut down its Ethereum futures ETF in September 2024. Many analysts believed then that the reason was that the Ethereum ETF underperformed relative to its counterparts, the Bitcoin ETFs.
The Fund Runs Through a Subsidiary in Cayman Islands
The Onchain Economy ETF is similar to a fund filed by Bitwise dubbed Bitcoin Standard Corporations ETF, which is designed to invest in firms that have substantial Bitcoin holdings as part of their corporate financial reserves. According to the firm, VanEck’s new fund will be run through a subsidiary based in the Cayman Islands to align itself with the current US tax regulations while gaining exposure to the said instruments.
As per the filing, the Digital Asset instruments in the Onchain Economy ETF filing refer to financial products like options, commodity futures, and other ETF products that provide exposure to digital assets. The company stated,
“The Fund does not invest directly in digital assets or commodities.” The statement by the company further explained that “The Fund’s investment in the Subsidiary will generally not exceed 25% of the value of the Fund’s total assets at each quarter-end of the Fund’s fiscal year.”
A Growing Interest in the ETF Segment
The latest application highlights growing interest within the ETF segment of the crypto market, which could result from growing optimism surrounding the anticipated friendlier regulatory environment once Donald J. Trump takes office on January 20. There has been a string of ETF applications lately, the latest being the November 2024 filing of the Bitwise Asset Management 10 Crypto Index Fund ETF, whose approval was recently pushed to March 2025.
Other applications that have been submitted and are awaiting approval include the WisdomTree, 21Shares, Canary Capital, and Bitwise, made in December 2024 for exchange-traded funds focusing on altcoins like XRP. Grayscale Investment has recently petitioned the SEC, intending to convert their existing Solana Trust into an ETF. REX Financial, on the other hand, is pursuing the REX Crypto Equity Premium Income ETF.
Conclusion
The filing by VanEck of the Onchain Economy ETF highlights investors’ growing interest in digital assets, especially in light of the anticipated crypto-friendly regulatory framework. If the SEC approves VanEck and most of the other said applications and reshapes retail and institutional access to crypto investments, the industry could see overwhelming changes and shift the entire crypto narrative.
Frequently Asked Questions (FAQs)
How does an ETF work?
Compare an ETF to a large basket of assets that you can trade on the stock market. However, instead of buying the asset, you buy a share of the ETF, meaning that you don’t have to buy the crypto asset directly but still benefit from its price movements.
Are there risks of investing in crypto ETFs?
Like any crypto investment, ETFs have risks, including market volatility and regulatory risks. The technology is still new and could face technical challenges.
Why invest in an ETF?
Investing in ETFs offers investors a slice of the dynamic world of cryptocurrencies without the need to handle them directly.
