SEC Delays Ruling on Five Bitcoin ETFs; VanEck/SolidX Proposal Under Discussion
The U.S. Securities and Exchange Commission (SEC) has announced it will delay its ruling on five bitcoin exchange-traded funds (ETFs) until September, fueling speculation that regulators are slowly warming to the idea of a crypto-backed fund. However, perhaps more important was the omission of the VanEck/SolidX application, which is viewed by crypto observers as having the best chance of gaining approval.
ETF Rulings Delayed
In the July 24 edition of the Federal Register, the Washington-based regulator said it will postpone any decision to approve bitcoin ETFs filed by Direxion Investments. The five ETFs, which were filed in January, include: Direxion Daily Bitcoin Bear 1X Shares, Direxion Daily Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull Shares, and Direxion Daily Bitcoin 2X Bear Shares.
“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change,” the regulator said.
According to the statement, the final decision on the proposed ETFs will come Sept. 21, 2018.
The regulator said it had only received two public comments on the proposed funds.
The Search for ‘Holy Grail’ ETFs Continues
By delaying the applications of these five ETFs, regulators may be allowing more time to consider a joint proposal by VanEck and SolidX to list a physically-backed bitcoin fund. Rumors of its approval, perhaps as early as next month, has contributed to bitcoin’s recent bull run.
VanEck issued a lengthy letter to the SEC on July 20 reiterating industry-wide support for the fund. The letter argued that bitcoin had sufficient liquidity through the futures market, adding that the derivatives contracts issued by CBOE and CME last December track closely to the bitcoin spot price. To allay concerns about manipulation, the letter stated that bticoin futures are “regulated and fall under the well-established” CFTC supervision framework, which would apply to the proposed bitcoin ETF should it be approved.
The SEC’s position on bitcoin has evolved since the first batch of crypto-backed ETFs was rejected last year. Notably, the securities regulator has deemed bitcoin and Ethereum to be non-securities for the reason they are “sufficiently decentralized.” The path to that realization was paved with a series of investor warnings, stock trading suspensions and ICO cancellations.
Securities regulators still have an axe to grind with ICOs and have made it clear that new crypto projects do not fall under the same scope as bitcoin and Ethereum.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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