Cboe Rule Change Withdrawn, Postponing Yet Another Bitcoin ETF

News, Regulation | January 24, 2019 By:

A rule change that would have created an exchange-traded fund (ETF) for bitcoin backed by VanEck and SolidX has been withdrawn by Cboe.

A notice published Wednesday from the US Securities and Exchange Commission said that the Cboe BZX Exchange had pulled the proposed rule change.

The US Securities and Exchange Commission (SEC) decided late last year to delay its decision on the  bitcoin exchange-traded fund (ETF) proposed by VanEck and SolidX.

In June of this year, both VanEck and SolidX filed with the SEC to list a physically-backed bitcoin ETF on the Cboe BZX Equities Exchange that will be insured against loss or theft of bitcoin. Under the arrangement, SolidX would act as the sponsor of the ETF and VanEck will provide marketing services. The application was published for comment in the SEC’s Federal Register on July 2.

In September, the SEC said that while it received more than 1,400 comment letters, the agency needs more feedback from the public related to the proposed bitcoin ETF, claiming that there was not adequate statements support to the proposal.

In a new notice posted on its website, the SEC pushed the deadline to make a decision to February 27, 2019. Under the Securities and Exchange Act, the agency must issue an order approving or disapproving the proposed ETF not later than 180 days after the date of publication of notice. However, the SEC may extend the period by 60 days if the commission determines that a longer period is appropriate and publishes reasons for such determination.

“The proposed rule change was published for notice and comment in the Federal Register on July 2, 2018.” the SEC said. “December 29, 2018, is 180 days from that date, and February 27, 2019 is 240 days from that date.”

The SEC said that the agency finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.

Cryptocurrency ETFs have long been sought as a way to legitimize the crypto sector and galvanize investors. The SEC has given its concerns on fraud and market manipulation as reasons for declining to approve prior applications for crypto ETFs.

The SEC rejected an attempt in July by Cameron and Tyler Winklevoss, founders of the Gemini cryptocurrency exchange, to list shares of what would have been the world’s first bitcoin ETF.

In August, the commission rejected nine proposed bitcoin ETF proposals – five crypto ETFs from Direxion, two from GraniteShares and two from ProShare – claiming that the products did not comply with the requirements by the “Exchange Act Section 6(b)(5).”