'It's laughable:' We spoke to 2 experts about a new bitcoin ETF's 19-page list of risks, and it's like nothing they've ever seen

Investment manager VanEck is trying its hand at launching a bitcoin-linked investment product for the third time.
But one market structure expert says its 19-page risk-disclosure section is "laughable."
The risk disclosures for VanEck's product are about double the normal length of typical ETFs, market structure experts told Business Insider.
The filing notes manipulation as a risk factor: "The price of bitcoin may be influenced by fraud and manipulation for a number of reasons."
"Why would you not want potential investors to know about every single thing," Daniel Gallancy, the CEO of SolidX, a partner with VanEck on the fund, said in response.

If at first you don't succeed, try, try, and try again. That appears to be VanEck's strategy when it comes to bitcoin-linked investments.

The asset manager has, for the third time, filed with the Securities and Exchange Commission a bitcoin exchange-traded fund, the company announced earlier this week. It is partnering with blockchain firm SolidX on the fund.

But one market structure expert is calling the fund's filing "laughable."

Joe Saluzzi, the cofounder of Themis Trading, said he's skeptical of bitcoin ETFs generally, but thought the one filed by VanEck was especially striking considering its risk disclosure section is 19 pages.

"Listen, I got a problem in general with the ETFs in bitcoin," Saluzzi said in a phone interview. "They have market structure problems they haven't begun to address, but this one is a stand out."

"It's laughable," he said.

Market observers told Business Insider that the number of pages of risk disclosures for VanEck's newest product are about double the length of typical ETFs. To be sure, many riskier investment products, such as those tied to oil and the volatility index VIX, have long disclosures, said Eric Ervin, the CEO of fund manager Reality Shares.

Still, none are as long. VXX, one of the original exchange traded notes tied to VIX, has about 9 pages of disclosures. VanEck's filing for an actively managed ETF linked to bitcoin derivatives has about 13 pages of risk disclosures.

A bitcoin ETF has been viewed as a natural next step in bitcoin's maturation as an asset and could precipitate the entrance of more retail investors into the crypto market. But the concept has received pushback from regulators who want to closely monitor the potential risks they could present to investors.

Opponents of bitcoin ETFs take issue with the lack of liquidity in the market and the lack of market surveillance to stomp out manipulation.

The filing notes manipulation as a risk factor. From the filing:

"The price of bitcoin may be influenced by fraud and manipulation for a number of reasons, including the following: most bitcoin spot markets are not regulated or supervised by a government agency; platforms may lack critical system safeguards, including customer protections; volatile market price swings or flash crashes; cyber risks, such as hacking customer wallets; and/or platforms selling from their own accounts and putting customers at an unfair disadvantage."

Daniel Gallancy, the chief executive of SolidX, said in an interview that there's nothing wrong with over-disclosing.

"Why would you not want potential investors to know about every single thing," Gallancy said. "Even the most obscure things, and most of the things in there are obscure, should be identified."

"Length of a disclosure section does not correlate with risk," Gallancy said. "Let the market decide if this is not a good product, but it is important that investors have the option to get exposure to bitcoin without operational risk."

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