SEC delays Bitcoin ETF decision again. Deadlines are now September and October

Posted: 13 August 2019 1:34 pm

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Bitcoin ETFs are in purgatory. BTC isn't good enough to go to heaven or bad enough to send to hell.

The SEC has once again delayed its decision on Bitcoin ETFs, according to its Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change to Amend NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares) and to List and Trade Shares of the United States Bitcoin and Treasury Investment Trust under NYSE Arca Rule 8.201-E.

Essentially, it has granted itself an extension on the deadline for approving or rejecting some Bitcoin ETF applications.

There is now a range of Bitcoin ETF applications in the works, with varying deadlines from September to October.

VanEck/SolidX Bitcoin ETF

The new deadline for the VanEck/SolidX ETF application is now 18 October. The proposed VanEck/SolidX Bitcoin ETF would simply and straightforwardly contain Bitcoin, and its share price would just track the trust's Bitcoin holdings.

We promise to be completely responsible. Pretty please make this legal, with a cherry on top." - I.C. Wiener

The VanEck/SolidX Bitcoin ETF wasn't the first Bitcoin ETF application, but it was the first to ignite public interest in Bitcoin ETFs, prompting input from concerned citizens such as Mr/Mrs Wiener.

Other commentators were more succinct.

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The reason this particular application "liiiiiiiiit" such a fire under Bitcoin enthusiasts is because people pointed that following the introduction of the first gold ETF in 2003, prices multiplied from $332 an ounce to over $1,500, and that a similar thing could happen to Bitcoin prices.

As the theory goes, gold ETFs made it easy for anyone to buy gold without needing to physically hoard chunks of metal, and the same thing could happen to Bitcoin.

Bitwise Bitcoin ETF

The deadline for the Bitwise Bitcoin ETF is 13 October, and its proposal is likewise a fund that simply tracks the price of Bitcoin physically held by a trust, including the value which may emerge from hard forks.

Like all the other Bitcoin ETF applications, this one was not approved on the grounds that the Bitcoin markets are too easily manipulated.

Unlike other Bitcoin ETF applications, Bitwise responded to the non-approval by explaining to the SEC that the cryptocurrency markets are estimated to be 95% fake volume, and that its decision to track Bitcoin prices via the so-called "real 10" exchanges, believed to have only legitimate trading volume, helps mitigate this risk.

But it might not be that easy, and it's said that even the "real 10" exchanges have wash trading problems.

Wilshire Phoenix Funds

This application joined the queue in June, and its decision date is now 29 September. The Wilshire Phoenix Funds proposal is to create a combined Bitcoin and treasury bill ETF, with treasury bills hedging against Bitcoin's volatility.

As envisioned, it would allocate the Bitcoin and treasury bill ratios based on Bitcoin's volatility in the previous month. The more volatile Bitcoin is one month, the greater the ratio of treasury bills in the ETF the following month.

This ETF design was initially pitched as a solution to the SEC's volatility concerns, but now it's found itself in the same delayed boat as the other applications.

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Disclosure: The author holds BNB, BTC at the time of writing.

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