MV Index Solutions (MVIS), a subsidiary of investment management firm VanEck, has announced the launch of MVIS Bitcoin U.S. OTC Spot Index (MVBTCO), a bitcoin-based index and the first one that monitors the performance of bitcoin across established over-the-counter (OTC) platforms in the U.S., according to a company statement.
The index will cover the spot price of bitcoin from these OTC platforms: Circle Trade, Genesis Trading and Cumberland.
MV Index Solutions helps to develop, license and monitor asset classes such as fixed income markets, equities and more, with the use of investment indices. The MVBTCO, which will track just bitcoin, increases MVIS's portfolio to 24 digital asset indices.
Thomas Kettner, managing director at MV Index Solutions, commented in the release, stating the company was excited to launch a “bitcoin index based on the pricing feed of OTC trading desks,” which he believes would serve OTC traders as a “reliable benchmark for their trades or potential investment products.”
Gabor Gurbacs, director of Digital Asset Strategies at VanEck/MVIS, calls the launch a great win for “greater transparency and price discovery” for institutional investors, which is necessary for the development of the digital asset space. In correspondence with Bitcoin Magazine, he said that he believes the index will bring greater legitimacy to a young market that has struggled to win the approval of regulators.
"Liquidity, price transparency and regulatory status were the 3 main reasons to build the MVBTCO OTC Bitcoin index. Over the counter-trading represents a large portion of daily BTC trading volume. Transparency to this segment of the liquid institutional OTC markets is a sign of maturity and proof that it’s possible to provide better regulated pricing sources from established trading operations. Trading operations in the index are broker dealers or affiliates of broker dealers, which is a higher regulatory status than crypto exchanges (trading platforms) have today. OTC trading desks are also far less susceptible to market manipulation."
Going further, Gurbacs even indicated that he believes an index like MVIS could set the stage for more institutional-friendly, regulated investment vehicles, like the crypto industry's much sought-after ETF.
"MVBTCO’s constituents are regulated and the newly gained transparency into the institutional OTC markets should make regulators comfortable. . .I believe this development may pave the way for more regulated funds, such as ETFs," he told Bitcoin Magazine.
The Bitcoin Index is expected to provide a new tool through which institutional investors can monitor the price of bitcoin. Up until now, data related to this has been derived from cryptocurrency exchanges. With this new index, they will receive transparent and more accurate data on pricing.
Earlier this year, VanEck, the parent company to MVIS and fintech company SolidX, developed a physically backed bitcoin exchange-traded fund (ETF) and applied for it to be listed on CBOE BZX Equities Exchange.
However, the U.S. Securities and Exchange Commission (SEC) has not deemed it fit to be approved. The agency had delayed its decision in August and again in September; it has now asked for comments from members of the public as it begins proceedings to decide whether or not to approve the VanEck/SolidX ETF.
One reason for the delay in approving the ETF is the SEC's concern regarding market manipulation and illegal practices being carried out on cryptocurrencies and digital trading platforms.
MVIS is VanEck's response to the concerns of the regulator, as the index uses a pricing source that builds on data from OTC counters that is subjected to “rigorous practices, regulatory-driven disclosures and client protection rules” — all measures that the SEC is looking to see in a bitcoin ETF.
Earlier this week, the Swiss authorities gave the green light to blockchain startup Amun AG's offer to list a cryptocurrency exchange-traded product (ETP), which sources its pricing from VanEck's MVIS.
This article was update to include quotes from Gabor Gurbacs, VanEck's director of Digital Asset Strategies.