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("BZX"), which was going to be the exchange that would list the VanEck-SolidX Bitcoin ETF if it got approved, had withdrawn the proposed rule change.

The SEC's notice said that BZX had withdrawn the "Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust", and that this proposal (SR-CboeBZX-2018- 040) had been withdrawn on Tuesday (January 22nd).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

Bitcoin vs Bullion: Which Is the Best Store of Value?

While Bitcoin might currently be considered a novel way of storing value, precious metals — specifically gold — have remained a fungible, private, and stable method of storing value for thousands of years. In today's post, we answer the question that the next generation of investors might be asking: can Bitcoin compete with Gold as a store of value?

One of the primary use cases of Bitcoin, apart from the transfer of value between individuals without the interference of institutional banking platforms is as a store of value. Bitcoin holds a distinct advantage over traditional fiat currencies in that it is a deflationary asset — rather than lose value, the limited number of Bitcoin that will ever exist makes Bitcoin, like gold, immune to inflation.

Bitcoin, however, is currently highly volatile, and exists within an evolving regulatory environment that obscures the long-term implications of holding it as a means of storing value. Gold, in contrast, has remained in a stable regulatory ecosystem and was, until the early 1970s, a cornerstone of the international fiat currency system.

Many cryptocurrency traders and investors exit positions in the cryptocurrency market by either “cashing out” Bitcoin for fiat currency via a wallet or exchange, or by trading bitcoin for “stablecoins” that are pegged to fiat currencies.

While these practices allow traders and investors to hedge against the volatility of the crypto market, they still rely on fiat currency. Gold on the other hand offers cryptocurrency traders a stable means of storing value outside of the cryptocurrency market without relying on the banking system.

Why Buy Gold?

gold chart.pngThe price of gold has risen approximately 100% since the Bitcoin network was created in January 2009

The primary function of gold in most investment portfolios is a hedge against volatile markets. The value of gold is generally stable, providing traders and investors with a reliable asset that can be purchased and held in case of a market crash. The 2008 global financial crisis, for example, saw gold prices increase by 5.5%, a significant shift for the precious metal, due to large liquidity and hedging needs.

Gold possesses several qualities that make it ideal for cryptocurrency traders seeking to establish a stable store of value outside of the cryptocurrency market: Unlike fiat currency, there is a finite amount of gold on the planet — it’s not possible for a country to mint any more than already exists.

Just like bitcoin, gold is also impossible to counterfeit. The unique chemically inert, non-allergenic, and ductile properties of gold make it a highly valuable precious metal, and one that is used in hundreds of industries worldwide.

While gold may not be ideal for traders seeking to profit from arbitrage or price volatility, it serves a critical function as a stable asset that can be used by traders as a secure, reliable long term method of storing value.

Buying and Storing Gold

Unlike bitcoin, gold is anchored to the real world with a physical presence. This means unless you have storage facilities—like a home vault, for example—you are likely to need to rely on a third party to store your metal.

Options for buying and selling gold are typically more limited than with bitcoin. Although you can theoretically sell to high-street shops or online broker-dealers at any time, these sources of liquidity tend to dry up during times of high demand. Unless you buy gold from a friend, you are also unlikely to be able to purchase gold anonymously, which gives bitcoin an advantage to the privacy-conscious.

If you are interested in buying gold using bitcoin, you can do so using the original bitcoin-gold exchange Vaultoro.

Why Buy Bitcoin?

Bitcoin holds a major advantage over gold as a bearer instrument — unlike gold, bitcoin can function as a currency, and there are a growing number of businesses that accept bitcoin as a payment method. While it’s possible to purchase goods and services both online and physically with bitcoin, it’s generally not possible to purchase a coffee, for example, with gold.

Gold may also appear to be a highly stable asset, but on a grand scale, the price of gold demonstrates inflationary characteristics. Over the last 100 years, the annual supply of gold has increased by between 1 and 2 percent. In comparison, the total supply of bitcoin is fixed by code — there will never be any more bitcoin beyond 21 million individual coins.

Buying and Storing Bitcoin

Bitcoin has a unique advantage over gold as a store of value. As crypto pioneer Nick Szabo points out, Bitcoin (and other crypto assets) are the only assets that can be secured without the help of the government. While land, property, stocks, or gold bullion can be taken away by force,  bitcoin does not exist in the physical world.

This means you can simply memorize your private key, perhaps in the form of a seed phrase of a few words, and then carry your bitcoin around in your memory.

If you were to buy your bitcoin anonymously using a peer-to-peer platform or a decentralized exchange, then nobody else would even know that you own the bitcoin in that particular wallet. Of course, while this approach might grant you 100% freedom, you also must bear 100% responsibility for the potential loss (or forgetting) of private keys.

Which Is the Best Store of Value?

Although bitcoin and gold both serve different functions, they also share many qualities. Bitcoin has been called digital gold and can be considered complementary to gold.

Perhaps the biggest advantage bitcoin has over gold, as pointed out by Satoshi himself, is that it cannot be debased or counterfeited. Ever since gold has been used as a store of value, cunning criminals have sought to falsify the element by mixing it with other metals. Most recently, these Chinese financial institutions found themselves in a pickle after discovering the loan they had given to a jeweler was secured by nothing other than gilded copper.

That being said, a lot of investors still prefer gold because of its proven track record of over 5,000 years as a store of value.

About the Author

Kieran Smith provides content strategy and copywriting services for cryptocurrency companies at Bitcopy.