Cboe Withdraws Proposal for VanEck-SolidX Bitcoin ETF, VanEck CEO Explains Why

On Wednesday (January 23th), the U.S. Securities and Exchange Commission ("Commission") announced that Cboe BZX Exchange ("BZX"), which was going to be the exchange that would list the VanEck-SolidX Bitcoin ETF if it got approved, had withdrawn the proposed rule change.

The SEC's notice said that BZX had withdrawn the "Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust", and that this proposal (SR-CboeBZX-2018- 040) had been withdrawn on Tuesday (January 22nd).

BZX had filed with the Commission this proposed rule change on 20 June 2018; this proposal "was published for comment in the Federal Register on July 2, 2018." Since then, VanEck, SolidX, and BZX had been waiting for the Commission to hopefully approve the proposed rule change, but the Commission kept asking for more time to make its decision, and the final deadline was going to be February 27th. 

On January 18th, American lawyer Jake Chervinsky, who is highly-respected in the crypto community for his excellent commentaries on how U.S. securities laws affect companies that deal with cryptoassets, decided to focus his attention on the VanEck-SolidX Bitcoin ETF proposal and how its approval/denial may (or may not) be affected by the current U.S. government shutdown (which began on 22 December 2018).

The reason that Chervisnky took to Twitter to comment on this particular Bitcoin ETF proposal and how it might be affected by the current government shutdown is that he had noticed on Twitter "a lot of confusion & misinformation about how the shutdown affects the SEC and its process for handling ETF proposals."

The conclusion of his tweetstorm was: "All I'm saying is that the shutdown doesn't improve the ETF's chances of approval at all. In fact, the opposite is probably true."

Shortly after the SEC's announcement came out, Chervinsky issued the following tweet:

Chervinsky's reasoning makes sense. Given what the SEC Chairman Jay Clayton said back in November 2018 about his concerns over market manipulation on exchanges dealing with Bitcoin, even without the current U.S. government shutdown, it would have been unlikely for the Commission to have given this or any other Bitcoin ETF proposal its blessing anytime soon since most Bitcoin trading takes place on exchanges outside the U.S. and therefore hard for the SEC to monitor/control. And so, it makes sense for BZX to withdraw the application now and save face rather than have the proposal be eventually disapproved by the Commission.

And a few minutes ago, Gabor Gurbacs, the digital asset strategist/director at VanEck/MVIS sent out the following tweet:

 

At press time (around 20:30 UTC on January 23rd), according to CryptoCompare, Bitcoin is trading at $3,555, down 0.93% in the past 24-hour period. The fact that the market has not overreacted to the SEC's announcement seems to suggest that a disapproval order from the Commission was already priced in, and since the withdrawal of the proposed rule change is not any worse than an outright rejection, it makes sense that the market is disappointed but not shocked by what has happened today.

Update on January 24th at 05:00 UTC: 

In an interview on January 23rd with CNBC's Bob Pisani, VanEck's founder and CEO Jan van Eck explained why their Bitcoin ETF proposal had been withdrawn:

"Techncially, the SEC is affected by the shutdown. So, we were engaged in discussion 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 and re-engage in the discussions when the SEC gets going again."

 

Featured Image Credit: Photo via Pexels.com

Global Task Force, U.S. Tax Agency, SEC Dominate Crypto Headlines

Regulations are ruling the crypto headlines so far this week. Over the past 24 hours, we’ve learnt the Financial Action Task Force (FATF) is reportedly set to finalize new international standards for regulating cryptocurrency firms next month. The commissioner of the Internal Revenue Service (IRS) has stated his agency has “made it a priority” to issue more comprehensive crypto tax guidance “soon.” Finally, the U.S. Securities Exchange Commission (SEC) announced it would delay, once again, its decision on the VanEck and SolidX Bitcoin exchange-traded fund (ETF) proposal.

At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $7,945.4 and $252.9; a 0.54% and 0.83% jump over the past 24 hours, respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 3,822.7 (-0.6%).

Global Standards for Regulating Crypto Firms Next Month

According to reports from CoinDesk, the FATF is set to finalize new international standards for regulating cryptocurrency firms next month. These standards, they report, are widely expected to subject crypto exchanges, wallet providers, and other businesses to the “travel rule” – a colloquial term given to a rule found in the Bank Secrecy Act (BSA) that requires all financial institutions to pass on certain information to the next financial institution, in certain funds transmittals involving more than one financial institution.

Introduced in 1996 in the U.S., the “travel rule” is designed to help law enforcement agencies detect, investigate, and prosecute money laundering and other financial crimes by preserving an information trail about persons sending and receiving funds through funds transfer systems. The arrival of such international standards would go beyond the basic know-your-customer requirements that are widely enforced in the crypto space at present.

IRS Commissioner: More Detailed Crypto Tax Guidance ‘A Priority’

According to letter from IRS Commissioner Charles P. Rettig dated May 16, the agency has “made it a priority” to issue a more comprehensive tax guidance for cryptocurrencies. The Commissioner’s letter was written in response to a request from 21 Congressmen to provide clarity on tax treatment in relation to cryptocurrency holdings.

In 2014, the U.S. tax agency issued a guidance for cryptocurrency. In his May 16 response letter, Rettig revealed the IRS will “soon” issue more robust guidance. “I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions,” the Commissioner wrote.

SEC Delays Decision on VanEck SolidX Bitcoin ETF

The SEC announced the postponement of a decision regarding the VanEck SolidX bitcoin ETF proposal. The postponed ETF proposal was initially filed over a year ago. In January – amid the U.S. Government shutdown – it was withdrawn, only to be resubmitted later that month. On March 29, the commission delayed the joint proposal for the first time. The SEC must announce its decision – or, for the final possible time, postpone its decision – on the proposed bitcoin ETF no later than August 19.

Notably, the U.S. investor watchdog is seeking comments from the public in relation to the proposed VanEck SolidX bitcoin ETF. To guide commentary, they included fourteen questions in Monday’s filing. Comments must be submitted within the following 21 days, whilst rebuttals to said comments are due within the next 35 days.