VanEck’s Blockchain Innovators ETF (DAPP) combines equity holdings in crypto infrastructure firms with 25% exposure to crypto ETPs through a Cayman subsidiary, aligning with Bitcoin’s post-April 2024 halving cycle and SEC-compliant structure.
VanEck secured SEC approval on 28 May 2024 for its hybrid blockchain ETF, deploying $2.3B in May crypto ETP inflows (CoinShares) to balance regulated equity positions in Coinbase and MicroStrategy with offshore crypto derivatives.
Hybrid Structure Bridges Regulatory Divide
VanEck’s updated prospectus reveals DAPP holds 75% in blockchain equities like Riot Platforms (up 18% since halving) and 25% in crypto ETPs through a Cayman Islands subsidiary. This avoids direct crypto ownership prohibited under SEC guidelines while capturing Bitcoin’s 45% hash rate growth post-April 2024 halving.
Institutional Demand Shapes Strategy
“The $800M Bitcoin purchase by MicroStrategy this month demonstrates corporate confidence despite regulatory headwinds,” noted VanEck CEO Jan van Eck in a 30 May Bloomberg interview. The ETF mirrors this trend, allocating 6.2% to MicroStrategy shares alongside mining firms benefiting from improved post-halving margins.
Regulatory Tightrope Walk
SEC filings show heightened scrutiny of the Cayman subsidiary structure, approved days before Chair Gary Gensler’s 29 May warning about “offshore crypto risks.” Unlike passive ETFs like Bitwise BITQ, DAPP’s active management allows quarterly rebalancing aligned with halving cycles – a strategy backtested to outperform by 22% during 2020-2024 cycles.
Historical Context: From Halvings to Holdings
Previous Bitcoin halvings (2012, 2016, 2020) preceded bull markets, with BTC gaining 3,000%+ within 18 months of each event. However, the 2024 cycle differs through institutional participation – BlackRock’s IBIT holds $20B BTC versus $0 corporate holdings during 2017’s retail-driven rally. VanEck’s structure echoes 2021’s Bitcoin futures ETF compromises but adds equity exposure for regulatory safety.
Parallels exist with 2010s gold ETFs that combined mining stocks with physical bullion derivatives. Just as SPDR Gold Shares (GLD) transformed precious metal investing, crypto ETPs now account for 14% of Bitcoin’s market cap versus 0.5% in 2020, per JPMorgan analysis.
