The advent of a U.S.-based, fully-regulated Bitcoin (BTC) exchange-traded fund (ETF) has long been a hope for crypto’s most fervent dreamers. Yet, these dreams, deemed quixotic by most, was quashed on Wednesday, as reports arose that the foremost cryptocurrency ETF application was withdrawn from the care of the (partially-defunct) U.S. Securities and Exchange Commission (SEC).
Related Reading: 58% of US Investors Would Invest in Bitcoin via ETF: Major Hedge Fund
CBOE Pulls Out Of VanEck Bitcoin ETF Deal
On Wednesday afternoon, the SEC released one of the most important crypto-related documents to-date. The two-page document, authored by SEC deputy secretary Eduardo A. Aleman, revealed that the Chicago Board Options Exchange (CBOE) had withdrawn its proposed rule change that would have facilitated the listing of VanEck and SolidX’s collaborative Bitcoin ETF.
Therefore, the exchange, U.S.’ largest options market, effectively killed the proposal, which garnered mounds of support heading into 2018’s year-end. This document was filed on January 22nd, just earlier today.
Crypto’s analysts, industry commentators, and researchers quickly took to Twitter to touch on this unfortunate occurrence. Jake Chervinsky, a crypto-friendly attorney based in Washington, D.C., explained that the withdrawal “implies” that CBOE and its partners were already expecting an eventual denial.
CBOE has withdrawn the VanEck/SolidX bitcoin ETF proposal (https://t.co/812Ym7U7Hh).
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.
— Jake Chervinsky (@jchervinsky) January 23, 2019
Chervinsky, who has quickly become a leading Bitcoin ETF commentator, added that the CBOE was likely acting in crypto’s favor, as it “didn’t want another SEC order setting a bad precedent for the future.”
Long story short, the Kobre & Kim lawyer made it clear that there will be no formal approval of a Bitcoin ETF in Q1 of 2019.
U.S. Government Shutdown?
While Chervinsky’s logic is sound, more speculation has raged regarding the application’s denial. More specifically, thoughts surrounding the ongoing U.S. shutdown, which has entered its second month, were rife.
Some claimed that if the ETF was approved by default, due to the SEC’s potential inability to issue a proper denial, the government entity would take swift action to take down the VanEck initiative. On the other hand, the SEC might have had to issue an automatic denial. Both of these scenarios would have likely dealt a larger blow than CBOE’s Wednesday withdrawal.
According to a Twitter user, who cited a purported Wednesday CNBC interview with VanEck chief Jan, the company claimed that the withdrawal of the proposed rule change was related to fears that the application wouldn’t get a green light. The Twitter user added that VanEck claimed that it needs more time to convince the SEC and other regulatory incumbents that Bitcoin’s market conditions can adequately support an ETF vehicle.
Jan Van Eck stated on air on CNBC ETF that it was because it wasnt getting passed and they needed more time to convince SEC about overseas bitcoin trading issues.
— JV (@JVWVU1) January 23, 2019
A tweet from Gabor Gurbacs, the head of VanEck’s crypto division, recently corroborated this. Gurbacs claimed that his firm still has ambitions to work with stakeholders and market makers to create a healthy ecosystem for such an investment instrument.
Interestingly, the crypto market has barely reacted to this news. At the time of writing, BTC has held above $3,550, while altcoins have also stood the ground. Yet, considering former crypto ETF developments, a move lower could hit the broader industry in the near future.
This news comes just days after Bitwise Asset Management and Wilshire Phoenix filed Bitcoin-related ETF proposals to the American financial regulator. Japan’s Financial Services Agency (FSA) has also made comments on crypto exchange-traded vehicles, claiming that it currently isn’t looking into approving such an offering, contrary to other reports.
This is breaking news, but NewsBTC will be sure to keep you in the loop in the hours and days to keep. Keep on checking in.