Jake Chervinksy, a legal expert who specializes in government enforcement defense and securities litigation, has done the calculations and says the Securities and Exchange Commission (SEC) has the ability to delay its decision on the BZX Bitcoin exchange-traded fund (ETF) developed by VanEck and SolidX until 4 March 2019.
0/ It kills me to tweet about SEC rulemaking procedures, but given the confusion on #crypto twitter today, it feels necessary.
TL;DR — the SEC can, and probably will, delay its decision on the VanEck/SolidX commodity-backed #bitcoin ETF until ~February 21, 2019.
— Jake Chervinsky (@jchervinsky) July 24, 2018
Since federal security laws made a long time ago had no mention of ETFs, every single ETF must get an individualized exemptive order from the SEC, essentially a law change, before it can be traded on the stock market. This is true for all ETFs, not just crypto-related ETFs.
CBOE submitted the BZX Bitcoin ETF proposal on 2 June 2018, and 45 days from that date the SEC will have to make a decision or extend the deadline. The 45 days will be up in early August, which has generated excitement in the Bitcoin community since BZX has the best chance so far to be approved by the SEC as it uses actual Bitcoins, allowing investors to buy Bitcoin on all the major stock trading platforms once it is approved. These stock trading platforms transact trillions of dollars, and it would only take a small fraction of this money going into Bitcoin to cause a massive rally.
The SEC can extend the 45-day deadline three times according to Jake Chervinsky, and they can add another 60 days after that if they feel a longer decision-making period is appropriate. This yields the 4 March 2019 date for the longest the SEC can wait until issuing a decision on the BZX Bitcoin ETF. Jake Chervinsky says, “I can’t imagine the SEC will approve the first ever Bitcoin ETF without taking all the time allowed by law. Sorry. Get ready to wait.”
Indeed, the SEC so far has been rejecting Bitcoin ETFs or extending the time allotted for a decision to be made. For example, the SEC just issued an extension for five Bitcoin ETFs developed by Direxion.
This realization that the SEC’s decision on the BZX Bitcoin ETF might not come any time soon could be part of the reason the Bitcoin market has fallen back to USD 8,000, after peaking near USD 8,500. Additionally, the SEC just rejected a Bitcoin ETF developed by the Winklevoss twins.
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