CBOE Exchange ‘Temporarily’ Withdraws VanEck-SolidX Bitcoin ETF Proposal

  • SEC publishes Withdrawal Notice
  • VanEck suggests withdrawal is only temporary 
  • Indicates U.S. govt. shutdown and talks with SEC

The Chicago Board Options Exchange (CBOE) has withdrawn its proposed rule change to list and trade shares of SolidX Bitcoin shares Issued by the VanEck SolidX Bitcoin Trust.

The Securities and Exchange Commission (SEC) on Wednesday Jan. 23 published a notice of withdrawal written by CBOE BZX Exchange. According to the notice, the exchange withdrew the proposal on Tuesday Jan 22.

Reason for CBOE’s Bitcoin ETF withdrawal

Although SEC’s notice did not specify any reason for the withdrawal, there are indications that it is related to the ongoing United States government shutdown which has limited the abilities of government agencies including the SEC. Crypto news outlet, Coindesk said that some securities lawyers were speculating that CBOE is trying to avoid an outright denial of its proposal as there are no staffers at the SEC to review the proposed rule change.

A decision on the proposal has been delayed at least twice since it was originally file in June 2018. In July, the SEC published the proposed rule change in the Federal Register for comment from the public and by August, it decided to postpone its decision on the proposal for the first time. Later in December, the SEC further postponed the date for its decision on the Bitcoin ETF to February 27, 2019.

As Smartereum reported, the SEC according to its guidelines cannot further postpone the decision—as it must give a “YES” or “NO” decision after the final delay.

At the time of writing, the U.S. government shutdown is in its 34th day which means that for most of the time since the decision was postponed, SEC staffers have not had time to review the proposal. This makes its sensible to withdraw the proposal at least temporarily to prevent an arbitrary rejection.

In a recent interview with CNBC, VanEck CEO Jan van Eck explained that they had to pull the proposal due to partial government shutdown and plan to restart the process at a later date when the SEC resume full operations.

In his words:

“We were engaged in discussions with the SEC about the bitcoin-related issues, custody, market manipulation, prices, and that had to stop. And so, instead of trying to slip through or something, we just had the application pulled and we will re-file when the SEC gets going again,”

In a letter sent to Coindesk, VanEck director of digital asset strategy Gabor Gurbacs, described the withdrawal as temporary. He wrote:

“We are actively working with regulators and major market participants to build appropriate market structure frameworks for a Bitcoin ETF and digital assets in general.”

A good Chance of Approval?

Several other bitcoin ETF proposals have been knocked out by the SEC in the recent past, notably proposals from Winklevoss-owned Gemini exchange on two separate occasions.

The VanEck-SolidX Bitcoin ETF Proposal is, however, different from most other proposals because it is a physically-backed bitcoin ETF based on the price of bitcoin itself rather than on bitcoin futures. As of December, the proposal has already received 1,600 public comments.

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