Bitcoin continued its slump on Wednesday, trading at $6,500 at about 10:45 am Eastern as the market reeled after U.S. regulators delayed the fate of the bitcoin ETF from VanEck and SolidX.
In June, ETF issuer VanEck and SolidX, a fintech company engaged in the bitcoin ecosystem, revealed plans for the VanEck SolidX Bitcoin Trust ETF (XBTC). That fund is targeted at institutional investors as it would debut with a share price of $200,000. That product would track an index linked to a group of bitcoin trading desks, possibly allaying some of the SEC’s prior concerns about funds linked to physical bitcoin.
The SEC explained that the Securities Exchange Act provides that it can extend the 45 days period from publication if it finds it “appropriate to designate a longer period” so it has sufficient time to consider the proposed rule change.
“Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act designates September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change.”
However, the SEC can still extend its decision period at that time.
A recent letter from VanEck to the SEC addressed some issues, including the use of futures and market liquidity. Bitcoin futures debuted on the Chicago Board Options Exchange (CBOE) in December with CME Group following suit just a few days later.
Investors Patiently Wait for Bitcoin ETF Decision
“Despite the anticipation, some pundits believe a decision in favor of an ETF won’t come until 2019. Brian Kelly, founder and CEO of BKCM LLC, an investment firm focused on digital assets, told MarketWatch in July that a decision in 2018 is unlikely,” according to MarketWatch.
“Given the proposed ETF’s regulation under the Securities Act of 1933 and 1940 Act and the fact that it offers exposure via regulated and surveilled bitcoin futures, we reasonably expect the proposed ETF to reduce potential manipulation and operational risk associated with a bitcoin investment product,” said VanEck in the letter.
The issuer also believes its effort to launch a bitcoin ETF via an investment structure that is already regulated (ETFs) is consistent with the SEC’s objective of protecting investors.
Last month, the SEC rejected plans by Winklevoss Capital Management founders Cameron and Tyler Winklevoss to launch the Winklevoss Bitcoin Trust, but some market observers believe the regulator will eventually approve exchange traded funds linked to bitcoin.
For more information on the cryptocurrency market, visit our Bitcoin category.