U.S. SEC Sets 30 September 2018 As New Deadline for Decision on VanEck-SolidX Bitcoin ETF

On Tuesday (7 August 2018), the U.S. Securities and Exchange Commission (SEC) announced that it needed more time to make a decision regarding the VanEck-SolidX Bitcoin ETF, and it set 30 September 2018 as the new deadline.

Via a notice published on its website ("Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust"), the SEC said that on 20 June 2018, Cboe BZX Exchange (BZX) had filed with the SEC "a proposed rule change to list and trade shares of SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust", which got published in the Federal Register on 2 July 2018.

Since the SEC had 45 days from the date of publication in the Federal Register to make a decision, this means that many people in the crypto space expected a decision to be made by 16 August 2018. However, the SEC has now decided to exercize its right to extend this deadline by another 45 days to 30 September 2018, saying that it needs more time:

"The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change."

Therefore, pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934, the SEC decided to designate "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."

Jake Chervinsky, who is an American lawyer (an asociate at the law firm of Kobre & Kim) specializing in securities litigation, had this to say on Twitter about the SEC's announcement:

Previously, on 24 July 2018, Chervinsky had published a series of tweets to explain the process the SEC uses to decide proposed rule changes for new ETFs:

Then, on 25 July 2018, Chervinsky sent out another tweet to summarize the SEC deadlines, as he saw them, for the VanEck-SolidX Bitcoin ETF:

Chervinky now says that we should expect the next three SEC deadlines regarding this ETF to fall on:

  • 30 September 2018
  • 29 December 2018 (i.e. 180 days from publication in the Federal Register)
  • 27 February 2019 (this is the final deadline, since 27 February 2019 is 240 days from 2 July 2018)

According to data from CryptoCompare, as of press time, Bitcoin (BTC) is trading around $6,902. Prior to the announcement, at 20:30 (UTC + 01:00), BTC was trading around $7,104. About 40 minutes later, it had fallen to around $6,870, i.e. a fall of roughly 3.4%.

BTC after VanEck decision.png

 

Featured Image Credit: Image Courtesy of VanEck

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.