The government shutdown is continuing over the weekend, and there are many companies that feel discouraged for their own businesses.
However, cryptocurrency has largely been unimpacted by the traditional market, and the investment manager VanEck believes the same about their application for the Bitcoin ETF. However, they believe that they have already done the necessary work to create a strong foundation that will appeal to the SEC.
The director of asset strategy, Gabor Gurbacs, said,
“I have done everything I can to build the right market structure for Bitcoin and digital assets.”
However, that does not change the fact that the Securities and Exchange Commission is not performing any of their typical administrative functions during the shutdown.
Presently, the authority has until the 27th of February to make their decision. They have allowed for delays in their decision before, and it is possible they will repeat that decision this time around as well, considering the lack of collaboration during the shutdown.
Jake Chervinsky, a blockchain attorney, has commented that, if the shutdown continues past the expected decision date, there will not be an automatic approval. Explaining, he tweeted over the course of multiple posts,
“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 in the Federal Register.”
Continuing, he noted, “The SEC doesn’t have the power to extend the 240-day deadline. The statute absolutely prohibits any further delays. By law, that means if the SEC fails to make a decision by the February 27 deadline, the ETF will be automatically approved.”
From these factors, he says that the idea that the ETF would be automatically approved, based on the lack of a decision by the required deadline, has become what most people believe. However, he posts out that it is “unlikely.” He added:
“It’s true that the SEC has stopped nearly all of its work due to the shutdown & furloughed most of its employees (they have to stay home). That includes the majority of staff members in the Division of Trading & Markets, which handles proposed rule changes (including ETFs).”
Presently, Chervinsky says that there is a group of people at the SEC to prevent missing deadlines. He believes that, if the shutdown continues beyond February 27th, the
“chance of approval is near zero.”
Even though there is a chance Chervinsky could be wrong, the shutdown is not good for the approval that VanEck looks for. As he writes,
“If the SEC will not approve new ETFs, then obviously it must deny them all. And why not? It should be very comfortable with a position like: ‘The shutdown prevented us from completing our review, so we can’t be sure that the requisite standards for approval have been met.”
There is still a chance of approval for the ETF by the deadline,
“especially if the SEC made its decision before the shutdown started.”
The only point that Chervinsky was trying to make is that the shutdown does not positively affect the ultimate decision made. As for Bakkt, considering the lack of a statutory deadline,
“don’t expect anything on Bakkt until after the shutdown (maybe months after).”
Gurbacs, even in light of this information, still has no worries or cares about what the shutdown does to the decision-making process. In December, he said,
“American wants a bitcoin ETF and we are here to build it. We think that we’ve met all market structure obstacles and requirements on pricing, custody, valuation, and safekeeping, so we are cautiously optimistic.”
Nasdaq has been taking action to ensure that they comply with any current and pending regulations that are imposed by the Commodity Futures Trading Commission. In December as well, Gurbacs said that the investment manager
“ran a few extra miles working with the CFTC to bring about new standards for custody and surveillance.”
The Intercontinental Exchange is also planning their bitcoin futures product launch within the first quarter of the year, though it will be physically settled.
ICE’s crypto exchange project, Bakkt, is also launching their market for bitcoin futures soon, though they have had to deal with multiple delays. This quarter is filled with launches of many products and platforms, so investors should keep their eyes open during this time.