VanEck-SolidX bitcoin ETF proposal temporarily withdrawn
The US government shutdown has put parts of the crypto world on hold.
For some background, there have been a few bitcoin exchange traded fund (ETF) proposals in the works, and there are already a lot of largely unregulated equivalents out there. But in that mysterious Internet way, the VanEck-SolidX ETF proposal was the one that drew a lightning bolt of mainstream attention.
The SEC, in line with its goal of engaging with public opinion and the wider industry on regulatory matters, started fielding comments from the public on the proposed VanEck-SolidX bitcoin ETF.
The reason bitcoin fans are so keen on seeing any bitcoin ETF come to fruition, other than because "it's liiiiiiiiiit", is because it's widely believed that a physical bitcoin ETF would open the doors for a lot more money to enter cryptocurrency, taking bitcoin prices to the moon or thereabouts.
But despite an optimistic tenor at the time, the ETF has yet to give any bitcoin ETFs the green light. Rather, it's been consistently knocking them back on the ground that they are vulnerable to market manipulation. Fair point.
VanEck-SolidX is undeterred though and has been continually re-applying with the goal of using SEC feedback to shape its product into a more compliant form.
Thanks to its earlier notoriety the VanEck-SolidX bitcoin ETF has become something of an unofficial face of the product type, while its high profile backing and wide publicity means it can be a good weather vane for anyone exploring the inroads the cryptocurrency industry is making with the SEC at relatively high levels. So, keeping an eye on the VanEck-SolidX bitcoin ETF can tell us a few things.
The first thing it tells us is that the US government shutdown is impacting regulatory developments in cryptocurrency.
VanEck CEO Jan van Eck said as much in an interview with CNBC.
"We were engaged in discussions 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 when the SEC gets going again," he said.
However, the general expert opinion is that the odds of slipping something through would have been slim to none anyway. Pulling the application for now might just be the prudent and polite thing to do, to expedite things later.
As lawyer Jake Chervinsky explains:
"The SEC's final deadline to approve or deny the ETF is February 27. That's 240 days after the ETF proposal was first published... that 240 day deadline is imposed by federal statute. Because the deadline is statutory, the shutdown doesn't affect it at all. The law continues to apply whether the government is funded or not."
If the VackEck-SolidX bitcoin ETF proposal was still on the SEC's desk at the 240 day deadline it would have been accepted by default, in theory. But according to Chervinsky and others, this would have been highly unlikely as the SEC isn't in the business of letting controversial products enter the market on technicalities.
Withdrawing the proposal can at least settle some of the speculation around the ETF, and maybe signal some good faith.
The upshot? It's now almost 100% certain that nothing whatsoever will be happening with the bitcoin ETF until the government shutdown ends.
Disclosure: At the time of writing the author holds ETH.
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