The U.S. Securities and Exchange Commission (SEC) has extended the time period it needs to make a decision on the Vaneck Solidx bitcoin ETF based on the proposed rule change filed by Cboe BZX Exchange. Meanwhile, the ETF team has submitted to the SEC key changes addressing all concerns cited as reasons for rejecting Solidx Bitcoin Trust ETF last year.
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Deadline Extended
The SEC announced Tuesday that it has extended the time it will take to make a decision on the proposed rule change to list and trade shares of Solidx Bitcoin Shares issued by the Vaneck Solidx Bitcoin Trust.
Cboe BZX Exchange filed the proposed rule change with the SEC on June 20, which was published in the Federal Register on July 2. This bitcoin ETF has received a lot of attention from the crypto community. “As of August 6, 2018, the Commission has received more than 1,300 comments on the proposed rule change,” the agency wrote.
The Commission explained that the Securities Exchange Act provides that within 45 days of the publication in the Federal Register a longer period may be designated, elaborating:
The Commission is extending this 45-day time period. The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change.
The SEC now “designates September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change.” However, this may not be the last time the SEC postpones its decision on this bitcoin ETF. According to the Exchange Act, the Commission can extend it 240 days from the date published in the Federal Register.
Key Concerns from Last Rejection ‘Resolved’
In March last year, the SEC rejected the proposed rule change filed by NYSE Arca to list and trade shares of Solidx Bitcoin Trust.
A document published on the SEC website dated August 1 details a meeting the previous day between 15 SEC officials and six representatives from Van Eck Securities Corporation, Solidx Management LLC, and Cboe BZX Exchange Inc.
A presentation was submitted by Solidx Management and Van Eck Securities to the Commission staff outlining the reasons why this proposed rule change should be approved, addressing concerns the SEC had in March. The presentation reads:
Issues identified in [the SEC’s previous] disapproval order have been resolved.
In July, Van Eck submitted a 13-page report to the Commission addressing various concerns the SEC has related to the ETF such as valuation, liquidity, custody, arbitrage, and potential manipulation.
Major Changes From Last Rejection
The presentation points out that there have been major changes since the SEC decided to reject the proposed rule change for Solidx Bitcoin Trust in March last year.
The first significant change is that “multiple derivatives markets now exist for bitcoin.” The presentation lists as examples CME bitcoin futures, Cboe bitcoin futures, Ledgerx bitcoin swaps and options contracts, and Cantor Exchange self-certified bitcoin swaps contract. The first two have a combined daily trading volume of “approximately $150 – $200 million,” the presentation details, reiterating that they are all regulated by the U.S. Commodity Futures Trading Commission (CFTC).
Secondly, the product pricing has changed as the proposed trust will use OTC index for pricing and NAV. Citing that the “CFTC has jurisdiction over OTC bitcoin trading,” the presentation emphasizes:
Potential manipulative activity would be identified immediately, providing the ‘necessary deterrent to manipulation’ described in the March 2017 disapproval notice.
In addition, there has been a “proliferation of information sharing agreements” that were not previously put in place in March last year.
Furthermore, citing the SEC’s “concerns regarding bitcoin ETFs and retail investors,” the presentation notes that “the initial share price will be set at a level designed to ensure that only institutional and ‘non-retail’ investors will be able to purchase shares,” which is a price per share of $203,750 as of July 30. The presentation also claims that existing bitcoin investments do not provide investors with sufficient protection, naming GBTC and XBT Provider as examples.
What do you think of the SEC postponing its decision on Vaneck/Solidx bitcoin ETF? Do you think the SEC will eventually approve this bitcoin ETF? Let us know in the comments section below.
Images courtesy of Shutterstock, Solidx, Van Eck, and the SEC.
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