Representatives of the investment management firm VanEck, blockchain company SolidX and CBOE have met with officials of the Securities and Exchange Commission (SEC) to inform them that the organization’s previous concerns regarding their Bitcoin exchange-traded fund (ETF) applications have been addressed.
The application for the VanEck SolidX ETF was initially rejected in early August, and both companies are looking to garner the approval they need.
Why a “Yes” Might Arrive Soon
In addition, VanEck has also produced a supporting document highlighting why their ETF should receive a green light.
These reasons include:
- There now exists a significant regulated derivatives market for Bitcoin.
- Relevant markets – CBOE, Bitcoin futures, OTC desks – are regulated.
- Concerns around price manipulation have been mitigated, consistent with approval of prior commodity-based ETPs.
- CBOE’s rules are designed to surveil for potential manipulation of trust shares.
- It promotes investor protection.
Taking Steps to Understand More
Both VanEck and SolidX have been working hard towards a Bitcoin-based ETF since March 2017, but the journey has been marred with rejections until now.
2 months ago, the SEC began seeking public opinion on the Bitcoin ETF application to better understand if it would attract investor interest while providing necessary security.
The application was met with positive reception, and the body scheduled their initial decision regarding the ETF for September 30, though this was later postponed to December 2018.
Why All the Worry?
In a recent television interview, SEC commissioner Kara Stein commented as to why cryptocurrency-based ETFs have been the subject of growing uncertainty as of late.
They’re going to have to show how they can get accurate valuations despite sometimes volatile price swings and how they can make sure there’s physical custody when necessary,” she explained. “How they’re going to make sure there’s adequate liquidity, especially in a 40-act fund context so investors can get their money. We’ll look at all those factors and make a decision on that particular fund and how it’s actually going to be able to handle those particular requirements.
Approval Could Be Right Around the Corner
In the meantime, anonymous sources cited by cryptocurrency news outlet Abacus Journal now claim that approval confidence for a Bitcoin ETF is very high.
While these sources have not been corroborated, they state that executives of CBOE, VanEck and SolidX have had “conversations” and meetings with representatives of the SEC including commissioner Elad Roisman, whom the Journal claims is “crypto-friendly.”
In addition, Stein – who has repeatedly voted “no” regarding cryptocurrency-based ETFs – is set to vacate her position in December. Her role will be taken by democrat Allison Lee, which the Journal states “could be a potential opening for the ETF approval.”
“The VanEck ETF is perfectly approvable if you have been reading the tea leaves in the rejection language at the SEC connected to previous submissions,” Abacus Journal further writes. “[The VanEck ETF] checks every box… Approval will probably come with a bunch of dissenting language amongst the respective approving members, but it will still get approved. Not backing down in any way.”