Yesterday, the US Securities and Exchange Commission (SEC) decided to delay a decision to approve a proposal presented by the Chicago Board Options Exchange (CBOE). The proposal outlined a rule change that would allow it to "list and trade shares of SolidX bitcoin shares issued by the VanEck SolidX Bitcoin Trust," thereby creating the first bitcoin exchange-traded fund (ETF).
According to the notice published by the SEC, the exchange first filed the proposal on June 20. On August 7, the SEC delayed its decision until September 20. However, the regulatory body again failed to make a decision, and yesterday announced it would again delay a decision on whether to approve the VanEck SolidX Bitcoin Trust ETF – this time until February 27, 2019.
Note: Although the CBOE filed its proposal on June 20, the investment management firms VanEck and SolidX first filed registration paperwork with the SEC to pursue a bitcoin ETF on June 6.
In a seemingly last-ditch effort to receive approval from the SEC, on November 28, representatives from VanEck and SolidX met with the SEC and made the case that the bitcoin market is mature enough and safe enough to support an ETF.
In a presentation, the two firms compared digital assets to physical assets such as crude oil, silver, and gold. Furthermore, they likened those markets to the bitcoin market, saying, "Similar to commodity futures, the spot and futures prices [of bitcoin] are tightly linked." In their eyes, this is evidence of a "well-functioning capital market."
When speaking to the resilience of bitcoin markets, VanEx and SolidX pointed out that 1) those who wish to manipulate the bitcoin market must have funds spread across multiple trading platforms; 2) the global price of bitcoin would have to be manipulated in order for it to be changed on a specific platform; and 3) "the homogeneity of bitcoin makes for a uniform worldwide market rather than regional semi-independent markets that result in non-fungibility and market fragmentation."
For these reasons, the two companies posit that bitcoin is no more vulnerable to price manipulation than any other commodity when compared to already approved exchange-traded products.
This presentation was brought before the SEC just one day after SEC chair Jay Clayton said he would only be comfortable in approving a crypto-related ETF when cryptocurrency is free from the threats of price manipulation.
The SEC has yet to approve a bitcoin ETF. In July, the SEC rejected a proposal for a bitcoin ETF presented by Cameron and Tylor Winklevoss. A month later, SEC staff rejected nine different proposals for bitcoin ETFs, although the commissioners later said they would review the action.
Just yesterday, Commissioner Hester Peirce, who is generally considered friendly to crypto, stated:
"Don't hold your breath. I do caution people to not live or die on when a crypto or bitcoin ETF gets approved. You all know that I am working on trying to convince my colleagues to have a bit more of an open mind when it comes to [crypto]. I am not as charming as some other people."
The SEC was not available for comment by press time.