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On Thursday (January 31st), Cboe resubmitted the VanEck-Solid Bitcoin ETF rule change proposal (which had been temporarily withdrawn on January 23rd). In this article, we take a closer look and examine what this means.
The U.S. Securities and Exchange Commission (SEC) announced on January 23rd that Cboe BZX Exchange ("BZX"), which was going to be the exchange that would list the VanEck-SolidX Bitcoin ETF if it got approved, had withdrawn the proposed rule change. The SEC's notice said that BZX had withdrawn the "Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust", and that this proposal (SR-CboeBZX-2018- 040) had been withdrawn on Tuesday (January 22nd). Had Cboe not withdrawn its proposal, the SEC would have had to make a final decision by February 27th.
This is how Gabor Gurbacs, digital asset strategist/director at VanEck/MVIS, announced the news on Twitter:
The Bitcoin ETF filing has been temporarily withdrawn. We are actively working with regulators and major market participants to build appropriate market structure frameworks for a Bitcoin ETF and digital assets in general. Will keep you updated. pic.twitter.com/o9yiN47ZKe
— Gabor Gurbacs (@gaborgurbacs) January 23, 2019
VanEck's founder and CEO Jan van Eck went on CNBC the same day to talk about the reason for the withdrawal of their Bitcoin ETF proposal, and this is what he said during that interview:
Technically, the SEC is affected by the shutdown. So, we were engaged in discussion with the SEC about the Bitcoin-related issues—custody, market manipulation, prices—and that had to stop, and so instead of trying to slip through or something, we just had the application pulled, and we will re-file and re-engage in the discussions when the SEC gets going again."
The "shutdown" that he was talking about was, of course, the U.S. government shutdown that had begun on 22 December 2018.
Shortly following that announcement on January 23rd, American lawyer Jake Chervinsky, who is highly-respected in the crypto community for his excellent commentaries on how U.S. securities laws affect companies that deal with cryptoassets, took to Twitter to explain what had happened.
CBOE has withdrawn the VanEck/SolidX bitcoin ETF proposal (https://t.co/812Ym7U7Hh).
— Jake Chervinsky (@jchervinsky) January 23, 2019
They haven't given a reason yet, but withdrawal implies that they expected denial & didn't want another SEC order setting bad precedent for the future.
There will be no bitcoin ETF in Q1 2019.
Chervinsky also explained what would happen if this proposal got re-filed:
If they file again (and I'm sure they will), the clock restarts: the SEC will have to make a final decision 240 days after the ETF proposal is published in the Federal Register. Along the way, they can delay their intermediate deadlines three times (at 45, 90, and 180 days).
— Jake Chervinsky (@jchervinsky) January 23, 2019
Well, the U.S. government shutdown thankfully ended on January 25th, 35 days after it had started.
And now, Cboe, VanEck, and SolidX are back for round two. This is the tweet sent out by Gurbacs at 18:44 UTC on January 31st:
The VanEck SolidX Bitcoin ETF proposed rule-change has been submitted by CBOE. Hard work by all teams involved. Public document: https://t.co/X25lOPjiFS pic.twitter.com/C9FP4adDE8
— Gabor Gurbacs (@gaborgurbacs) January 31, 2019
If we take a look at the link to the rule filing helpfully provided in Gurbacs' tweet, we find out that Cboe's Assistant General Counsel Kyle Murray filed rule change proposal SR-2019-004 on January 30th. Here is the abbreviated description of the proposal:
"The Exchange proposes a rule change to list and trade shares of SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust, under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares."
What Cboe, VanEck, and SolidX have done is quite smart. Even if the U.S. government shutdown had not occurred, given SEC Chairman Jay Clayton's attitude towards Bitcoin markets, their Bitcoin ETF proposal would probably have been disapproved. By withdrawing their proposal and resubmitting now, once it is published in the Federal Register, the SEC will have another 240 days (maximum) to make a decision, which means that this Bitcoin ETF proposal will have a much better chance of getting approved (although still not a sure thing by any means) than if they had simply waited for the February 27th deadline to come.
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