VanEck donates 5% of Bitcoin ETF profits to the main developers

Bitcoin ETF applicant VanEck has pledged to donate 5% of the fund's profits to Bitcoin Core developers until it receives approval to launch from the US Securities and Exchange Commission (SEC).

Commitment can serve as a major lifeline for developers of the first crypto network who are known to face a lack of funding or financial incentives for their work.

VanEck's Bitcoin Hope

VanEyck has been an active ETF and mutual fund manager since 1955, with $76.4 billion in assets under management as of September 2023.

“We are not Bitcoin tourists at VanEck. We're in it for the long haul,” VanEck wrote to X on Friday, adding that his pledge already includes a $10,000 donation to developers.

“Decentralization and relentless pursuit of innovation are the cornerstones of the Bitcoin ecosystem, and we're here to support it.” The company added.

VanEck's donations are channeled through Brink, a nonprofit that connects donor funds to Bitcoin code testers and maintainers.

Brink's alliance and support partners include major crypto exchanges such as BitMEX, Kraken and Coinbase. The biggest pledge to date is #startsmall – the philanthropic initiative started by Twitter co-founder Jack Dorsey – which is currently giving $5 million to Davis over five years.

Unlike other networks, Bitcoin has no natural source of funds or source of protocol maintenance because its development is not funded through an Initial Coin Offering (ICO) or a dedicated basis.

Over the past several years, a number of watchdogs – the ones that review proposals to change Bitcoin's code, called “commits” – have stepped down. They have also faced legal pressure from the likes of Craig Wright, who claims to be the anonymous creator of Bitcoin, Satoshi Nakamoto.

Doing the math on VanEck's promise

Bloomberg ETF analyst James Seifert predicts that Bitcoin ETFs will take in a combined $10 billion in revenue in the first year of their approval, which is expected within days.

Assuming that VanEek would have taken 10% of the market share of its competitors, that would mean that the fund would take in $1 billion of BTC in a year.

The fund has yet to disclose its sponsorship fees, but if it charges 0.8%, as rivals Arch/21Share and Valkyrie have proposed, that would generate $8 million in profits for the fund a year from now.

At a 5% donation rate, this means Bitcoin developers can enjoy $400,000 in donations for ten years. This will not lead to several years of growth in the fund's BTC value, which some analysts believe could reach $200,000 per coin by 2025.