The Chicago Board Options Exchange (CBOE) with asset managers VanEck has resurrected Bitcoin ETF bid with little adjustment. Will there be a Bitcoin ETF this year?
February 01, 2019 | AtoZ Markets - The Chicago Board Options Exchange sent a big shock through the crytpocurrency industry when it pulled a closely watched application for a cryptocurrency exchange traded fund (ETF) earlier this month. SolidX Bitcoin shares, as it is called, is a collaborative effort between asset manager VanEck and SolidX. The application was first submitted to the CBOE in 2018 but was pulled by the temporary U.S federal government shutdown. The shutdown happened few weeks before this application would have faced a verdict from the SEC. VanEck CEO, Jan VanEck however confirmed that the company would refile once the shutdown was over and the SEC returned to work.
SolidX Bitcoin Trust, if it scaled through, would allow wealthy investors and traders to invest in Bitcoin through an SEC-regulated investment vehicle. The SEC has rejected many Bitcoin ETFs in the past and has been hesitant to allow retail investors gain access to cryptocurrency through SEC-regulated investment vehicles due to major concerns. However, VanEch had expressed optimism that this project will be the first to get approval from the U.S regulatory body. Specifically, this Bitcoin ETF product will make shares available only for wealthy individuals.
Why This Will Take Time
It's not certain that this new application would succeed. The SEC has rejected and shut down a number of cryptocurrency ETFs in the past, citing fears of lack of liquidity in the Crypto market and manipulations by the exchanges that trade spot cryptos. Even if this ETF project is successful, it will take a long time before it starts trading on a regulated stock exchange. In the past, the SEC has delayed rulings on crypto ETF applications and most times it takes months to decide whether to accept or reject. This wouldn't be an exemption. A government enforcement defense and securities litigation attorney at Kobre & Kim, Jake Chervinsky said that there would not be a Bitcoin ETF in the first quarter of 2019.
Going back to previous ETF rejections, the SEC has three major factors that influence its decision to accept or reject a Crypto ETF proposal.:
- Manipulations in the crypto market
- Lack of regulation of the crypto markets in overseas countries
- Surveillance and Investor protection
All these issues are not yet resolved and if going by previous similar EFT projects, this one might just add to the list of rejected crypto ETFs by the U.S SEC. Currently, the SolidX ETF application has been refiled and a deadline set. So we will see what happens next. From all indications, even if this goes successful, this Bitcoin ETF will reasonably not be approved by the SEC before the last quarter of the year. View the full application.
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