SEC Stalls VanEck SolidX Bitcoin ETF till at Least 30th September 2018

The highly-anticipated decision on the VanEck SolidX Bitcoin exchange-traded fund (ETF) has been stalled until at least 30 September 2018, according to an announcement from the Securities and Exchange Commission (SEC) on 7 August. The Bitcoin market dropped from USD 7,150 to less than USD 6,600 as of this writing and it continues to drop, as the Bitcoin community can now clearly see that a Bitcoin ETF will not be approved by the SEC anytime soon.

This particular Bitcoin ETF was the main reason behind the speculative rally in July that pushed Bitcoin’s price up to USD 8,500 from lows of less than USD 6,000. Now, it appears the market is on track to erase all of those gains. The rally initially halted when the SEC issued a 92-page rejection letter for the Winklevoss Bitcoin Trust ETF, which is much like the VanEck SolidX Bitcoin ETF in that it uses actual Bitcoins in its reserves instead of cash. In the lengthy rejection letter, the SEC detailed how the Bitcoin market was too volatile and unregulated to be the basis of an approved financial instrument.

The ultimate message is that no matter how well put together these Bitcoin ETFs are, they stand no chance of being approved under the current administration. Over 1,300 comments were submitted to the SEC regarding the VanEck SolidX Bitcoin ETF, mostly favorable, but they had no impact on the SEC’s decision to delay the ETF decision today. The SEC has the power to delay the decision all the way until March 2019 under their laws,  and the expert who made that calculation expects the SEC to extend the decision deadline to the maximum. All things being equal, in March 2019, the SEC would likely simply reject this ETF.

One of the SEC commissioners says the SEC decision to reject the Winklevoss Bitcoin Trust ETF was a major disservice to investors since it would force investors to trade outside of SEC-regulated markets.

Fortunately, the Commodities Futures Trading Commission (CFTC) is much more favorable towards Bitcoin, and has already allowed the launch of Bitcoin futures on CME and CBOE in late 2017. Also, the Bakkt exchange, backed by the Intercontinental Exchange (ICE), is proposing physical Bitcoin futures. These physical Bitcoin futures, projected to launch in November 2018, will be just as good for facilitating institutional investment as a Bitcoin ETF, if not better and more likely to be approved.

 

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