VanEck Seeks SEC Nod for ‘Onchain Economy ETF’ Focusing on Crypto Infrastructure

The proposed “Onchain Economy ETF,” is seeking to trade under the ticker symbol NODE, and will not invest directly in cryptocurrencies but instead will provide exposure through companies and investment vehicles linked to the digital asset ecosystem.

According to the preliminary prospectus filed with the SEC on January 15, 2025, the ETF will allocate at least 80% of its net assets to “Digital Transformation Companies” and “Digital Asset Instruments.” This includes companies that operate crypto exchanges, payment gateways that authorize direct payment processing, and those involved in or assisting with digital asset mining. The ETF will also invest in companies providing software services, equipment, and technology, as well as energy and data infrastructure for digital asset operations, as well as companies that facilitate commerce with the use of digital assets.

VanEck defines “Digital Transformation Companies” as those that operate or assist with “digital asset projects” or those that own a “material amount” of digital assets. The fund’s investment strategy also casts a wide net, encompassing companies providing technology, energy infrastructure, data center capacity, and other services supporting digital asset operations and companies that own substantial digital assets.

“Digital Asset Instruments,” according to the filing, include commodity futures contracts, exchange-traded commodity-linked instruments (including options and options on futures contracts), swaps, and exchange-traded pooled investment vehicles such as cryptocurrency ETPs (exchange-traded products) offering exposure to digital assets. 

Importantly, the ETF will not hold any digital assets like Bitcoin or other cryptocurrencies directly. Instead, the ETF will gain exposure by investing through these companies and instruments. This appears to be a strategic maneuver to navigate current regulatory hurdles that limit investment companies from holding digital assets directly.

The filing states that “the Fund seeks long-term capital appreciation” and may engage in active and frequent trading. It also specifies that the Fund is classified as a non-diversified fund, meaning it can invest a larger proportion of its assets in a particular issuer. 

The fund’s investment in a wholly owned Cayman Islands subsidiary may not generally exceed 25% of the value of the Fund’s total assets at each quarter-end of the Fund’s fiscal year and seeks to provide indirect exposure to Digital Asset Instruments within federal tax laws limiting investment companies. The filing also acknowledges the “high degree of volatility” associated with the targeted assets.

The prospectus highlights principal risks, including those associated with “Digital Transformation Companies,” acknowledging that the technology is new and developing and that cryptographic keys necessary to transact digital assets may be subject to theft, loss, or destruction. It notes the possibility that competing platforms and technologies may emerge, and that values may not reflect a company’s connection to digital assets due to their other business operations.

Additionally, the fund is exposed to risks inherent in its investments in Digital Asset Instruments, including those related to price volatility, the lack of full investor protections typical of US registered funds, commodities, and commodity-linked instruments, and futures contracts. The filing notes risks associated with certain futures contracts that could see a negative return in contango markets.

While the filing offers a comprehensive overview of the proposed fund’s operation and risk factors, details such as the management fee, specific investments, and the exact date of the proposed public offering remain to be determined.

“More details will be coming soon,” VanEck’s head of digital assets research, Matthew Sigel, said in a social media post.

The filing states that the fund expects to effect the creation and redemption of shares using a mix of in-kind securities and cash transactions and that shares of the ETF will be purchased and sold on an exchange, although its listing exchange has yet to be determined. Investors in the fund are warned that shares may trade at a premium or discount to their underlying net asset value (NAV). The SEC will now review the prospectus for compliance with securities regulations, and if approved, the fund could soon start trading.