The United States Securities and Exchange Commission (SEC) publishes the Bitcoin Exchange-Traded Fund presentation given by CBOE VanEck SolidX last week but today delays decision til September 30th, 2018.
VanEck SolidX’s presentation was an effort to convince the regulatory agency to approve its bitcoin ETF. The SEC had marked August 10th date as the day to decide the first-ever crypto-related ETF approval – but has delayed the outcome until September 30, 2018. Since the SEC has previously denied fifteen straight bitcoin ETFs, crypto enthusiasts feel like it has a slim chance for approval but the CBOE VanEck SolidX Bitcoin ETF proposal does have the highest chance out of all the one assembled (yes, more than Winklevoss). VanEck's Gabor Gurbacs remains very confident on the outcome despite today's news of a delay (better than an outright denail right?).
But in a popular cryptocurrency group, there came up an interesting comment that is worth everyone to note and take head to..here it is:
“I run an ETF company. Everything about this is unorthodox. First of all if they wanted to kill it they would have. If they wanted to go through the motions they could have given it the typical 75 day delay which is their right. This on the other hand is a small’ish delay. Don’t throw in the towel. When we got our first ETF approved it took nearly two years and every single delay was for the full 75!days. I’ll be on Bloomberg tomorrow speaking about this with Eric Balchunas.”
Pretty sweet insight right? Almost as clear as this credible source bitcoin ETF approval is near certainty as the writings are on the virtual currency wall that this is just a matter of time. Of course this all comes on the heels of SEC Commissioner Hester Peirce expressing her public dissent as well.
Now, back to the topic at hand – you can view the SolidX bitcoin ETF presentation at SEC.gov here. The presentation took place on July 31 and involved officials from a number of SEC offices. Presenting to the agency were representatives from SolidX, Cboe BZX Exchange, VanEck Securities Corporation, and Patomak Global Partners.
On the SEC side, the presentation involved the Division of Trading and Markets, the Division of Corporation Finance, and the Division of Economic and Risk Analysis.
The document isn’t a minute-by-minute recap of the meeting. It does, however, offer crucial insights into the arguments made in favor of the bitcoin ETF.
The bitcoin ETF representatives, for example, attempted to woo the SEC with claims of,
“significant changes in product, market structure and overall circumstances since March 2017 disapproval.”
This is the same bitcoin ETF team that was denied in March 2017. However, the bulk of the presentation was an attempt to convince the SEC that the markets and the ETF are significantly different than they were in March 2017.
VanEck is arguing that not only have the markets changed significantly since that point, but that the ETF itself has changed. It’s a different product in a different market, and VanEck believes their ETF abides by all SEC rules and regulations.
Another key point of the presentation was the argument that the SEC has previously approved products with active, well-established futures trading markets. Historically, the SEC has approved exchange traded products (ETPs) with “well-established, significant, regulated markets” for trading futures on the underlying commodity.
Gold and silver, for example, had active and well-regulated futures trading markets long before they had ETPs.
According to the document from the latest presentation, the presenters cited the SEC’s comment at the time of the last rejection in March 2017, saying:
“The Commission notes that bitcoin is still in the relatively early stages of its development and that, over time, regulated bitcoin-related markets of significant size may develop. Should such markets develop, the Commission could consider whether a bitcoin ETP would, based on the facts and circumstances then presented, be consistent with the requirements of the Exchange Act.”
The presenters go on to describe how “significant changes” have occurred in bitcoin markets – like the launch of bitcoin futures in December 2017. Based on the SEC’s comments from March 2017, the presenters feel their product now meets those requirements.
In other words, the SEC outlined specific conditions that needed to occur for a bitcoin ETF to be approved, and VanEck is arguing that those conditions have occurred.
The presenters cited the fact that multiple derivatives markets are now available for bitcoin, including CME bitcoin futures and Cboe bitcoin futures. Bitcoin has an active and well-regulated futures trading market – something it didn’t have at the time of the March 2017 rejection.
“All of the above [futures trading markets] are markets regulated by the CFTC (the U.S. Commodity Futures Trading Commission) and all are cleared products,” the presentation explained.
You can view the full presentation from the meeting here. It’s titled, “Meeting with Van Eck Securities Corporation, SolidX Management LLC, and Cboe BZX Exchange, Inc.”