U.S. SEC Needs Time to Consider VanEck Bitcoin ETF Proposal – Details

U.S. SEC Needs Time to Consider VanEck Bitcoin ETF Proposal – Details

VanEck Bitcoin ETF Proposal

The U.S. Securities and Exchange Commission (SEC) on May 20th said it needed more time to consider the VanEck–SolidX Bitcoin ETF proposal. This delay has given interested parties more time to comment on the proposal.

Cboe BZX Exchange (“BZX”) on 30th January 2019, filed with the SEC a proposed rule change to list/trade shares of “SolidX Bitcoin Shares”, which would be issued by the VanEck SolidX Bitcoin Trust. This proposed rule change was published in the Federal Register on 20th February 2019. It then had 45 days to approve, disapprove, or ask for a delay.

BZX had filed its original proposal back in June 2018; the SEC delayed a decision on this proposal several times, and February 27th was the final deadline for the SEC to make a decision. However, due to the U.S. government shutdown that occurred in December 2018 and ended in January 2019, the SEC was partially out of action during this period. By the time that the SEC fully operational again, there was only a few weeks left till the final deadline. So, to give this Bitcoin ETF proposal the best chance of success, on 22 January 2019, BZX withdrew its original proposal, and re-applied.

On 29th March 2019, the SEC released a notice to say that it had selected 21 May 2019 as the date by which it should approve, disapprove, or ask for a further delay to consider the grounds for disapproving the Bitcoin ETF proposal.

Yesterday, just one day before the expiry of the 90-day deadline the SEC decided to delay making a decision, and this time it had to provide “notice of the grounds for disapproval under consideration” (i.e. explain why it thinks that it might deny the proposal).

These are a few of the SEC’s concerns, and it is inviting the ETF’s sponsor BZX, and other interested parties to provide written comments.

  1. Has BZX “entered into a surveillance-sharing agreement with a regulated market of significant size related to bitcoin?”What is the relationship between the Bitcoin futures market and the Bitcoin spot market?

2. The proposed Bitcoin ETF uses “a non-public, proprietary index to value holdings based on OTC activity”, but is this really “an appropriate means to calculate the NAV of an exchange-traded product”?

3. BZX has said in its proposal that it “has entered into a comprehensive surveillance sharing agreement with the Gemini Exchange and is working to establish similar agreements with other bitcoin venues.” But is the Gemini digital asset exchange “a regulated market of significant size”?

Any arguments regarding whether the proposal should be approved or disapproved need to be submitted within 21 days of publication in the Federal Register of yesterday’s order (Release No. 34-85896; File No. SR-CboeBZX-2019-004), and anyone who wants to “file a rebuttal to any other person’s submission” must do so no later than within 35 days of the date of publication in the Federal Register.

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