• NOW

News

  • NOW

How US Government Shutdown Affects Bitcoin ETF Approval

The U.S. Securities and Exchange Commission (SEC) is due to make a decision on the Vaneck Solidx bitcoin ETF next month, and the deadline cannot be extended further. However, since the U.S. government is currently shut down, a securities lawyer explains what is likely to happen to the ETF, including the likelihood of an automatic approval.

Also read: Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations

ETF Could Be Automatically Approved

Jake Chervinsky, a lawyer who focuses on litigation involving securities, commodities, futures and other derivatives, explained in a series of tweets on Friday how the current U.S. government shutdown could affect the upcoming decision on the Vaneck Solidx bitcoin exchange-traded fund (ETF).

Lawyer Explains How US Government Shutdown Affects Bitcoin ETF Approval

The commission has designated a date by which it shall either approve or disapprove the proposed rule change filed by Cboe BZX Exchange to list and trade shares of Vaneck Solidx Bitcoin Trust. The “final deadline to approve or deny the ETF is February 27. That’s 240 days after the ETF proposal was first published in the Federal Register,” Chervinsky tweeted, emphasizing:

The SEC doesn’t have the power to extend the 240-day deadline. The statute absolutely prohibits any further delays … By law, that means if the SEC fails to make a decision by the February 27 deadline, the ETF will be automatically approved.

However, he proceeded to explain why it is “‘extremely’ unlikely” that the bitcoin ETF will be automatically approved.

SEC Not Totally Shut Down

While many U.S. government departments have completely shut down due to political deadlock between President Trump and Congress over the southern border wall, the SEC posted a notice on its website stating that “Effective Thursday, Dec. 27 and until further notice, the agency will have a very limited number of staff members available.” The commission added that they will “respond to emergency situations involving market integrity and investor protection, including law enforcement.”

Lawyer Explains How US Government Shutdown Affects Bitcoin ETF Approval

The SEC has posted its operational plan during a shutdown on its website. The document explains that the agency will discontinue “review and approval of applications for registration . . . with respect to new financial products,” which include bitcoin ETFs, Chervinsky clarified.

He believes that the commission views “preventing controversial financial products like bitcoin ETFs from being auto-approved due to blown deadlines” as one of the “activities necessary for a short period in order to ensure an orderly shutdown of operations,” elaborating:

In fact, the SEC has ‘already’ taken action during the shutdown to avoid missing deadlines on other proposed rule changes … the SEC has a skeleton crew handling proposed rule changes during the shutdown.

Therefore, if the government shutdown continues until Feb. 27, “that same crew should be around to issue an order approving or denying the ETF,” the lawyer wrote.

Chance of Approval

While acknowledging that there is still a chance the SEC could approve the bitcoin ETF, Chervinsky believes that if the shutdown continues past the deadline then the chance “is near zero.” He further asserted that even if the ETF is automatically approved:

It isn’t likely to stay in effect for long. Automatic approval isn’t a lifetime guarantee & can be undone easily. When the shutdown ends, the SEC can just force the ETF to be delisted.

Lawyer Explains How US Government Shutdown Affects Bitcoin ETF Approval

The lawyer also commented on Bakkt’s pending approval by the Commodity Futures Trading Commission (CFTC). “Unlike the SEC, the CFTC has no statutory deadline for making a decision on Bakkt,” he clarified. “So it can delay as long as it wants. Don’t expect anything on Bakkt until after the shutdown (maybe months after).”

What do you think will happen to the Vaneck Solidx bitcoin ETF? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

Tags in this story
approval, automatic, Bitcoin, BTC, CFTC, crypto, Cryptocurrencies, Cryptocurrency, deadline, Digital Currency, ETF, Government, lawyer, N-Economy, SEC, shutdown, solidx, Trump, vaneck, Virtual Currency
Related
RBI Excludes Cryptocurrency From Indian Regulatory Sandbox

India's central bank, the Reserve Bank of India (RBI), has unveiled its framework for a fintech regulatory sandbox. While blockchain… read more.

G20 Prepares to Regulate Crypto Assets - a Look at Current Policies

Following their joint declaration committing to regulate crypto assets, the G20 countries are now preparing to set crypto policies at… read more.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.