In what might have come as a major setback to the Bitcoin community, CBOE has withdrawn its Bitcoin ETF proposal. The fate of CBOE’s VanEck SolidX Bitcoin ETF approval was awaiting a decision from the SEC. Furthermore, the final deadline for the approval was by the end of February 2019. However, it seems that the ongoing U.S. government shutdown has been a major spoiler in the game.
On Wednesday, January 23, the SEC released a notice of withdrawal of VanEck Bitcoin ETF by the CBOE BZX Exchange. Just three days back, CoinSpeaker covered how the shutdown could majorly impact the chances of ETF approval. To everyone’s dismay, things have not turned quite well enough.
The U.S. Government Shutdown, a Major Reason of the Withdrawal
The ongoing U.S. government shutdown has been a major spanner in the wheel of Bitcoin ETF. Thus, the U.S. Securities and Exchange Commission (SEC) has announced that it has decided to keep all operations on hold. However, the agency has staff “available to respond to emergency situations involving market integrity and investor protection, including law enforcement”.
While speaking to CNBC on Wednesday, January 23, VanEck’s founder and CEO, Jan Van Eck, told that they are ready to answer all the queries as earlier raised by the SEC. However, it needs the government to stay open to make its case “clearly and convincingly to the regulators”. Van Eck said:
“We were engaged in discussions with the SEC about the bitcoin-related issues, custody, market manipulation, prices, and that had to stop. We were trying to do that but we obviously can’t have meetings when they’re shut down. Instead of trying to slip through or something, we just had the application pulled.”
However, this is not the end of the story, as this seems to be a temporary withdrawal. Tweeting on Wednesday, Gabor Gurbacs, Director of Digital Assets Strategy at VanEck gave the confirmation that this is just a temporary withdrawal. Gurbacs said that the company is actively working with regulators to form a proper framework around the Bitcoin ETF.
The Bitcoin ETF filing has been temporarily withdrawn. 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. Will keep you updated. pic.twitter.com/o9yiN47ZKe
— Gabor Gurbacs (@gaborgurbacs) January 23, 2019
In the CNBC’s “ETF Edge” show, VanEck founder also stated that “We will refile when the SEC gets going”.
SEC Has a History of Bitcoin ETF Rejections
While many from the Bitcoin community has pinned hopes on the VanEck ETF proposal, the chances of SEC approving it looked slimmer. Firstly, the SEC has been constantly delaying the approval date until the February 2019 deadline. Secondly, SEC Chairman Jay Clayton recently made it clear that the market is yet not ready for ETF-like products.
In November 2018, Clayton said that the crypto market is facing a major menace of continuous hacking events which has out investor protection and safety on a toss. He added that the crypto exchanges don’t have the necessary sophisticated tools to tackle market manipulation activities.
A few months back, Gemini’s Winklevoss twins had to face similar rejections from the SEC. Although they have not given up on bringing a Bitcoin ETF to the market. During a Reddit AMA session earlier this month, the Winklevoss twin reiterated their commitment to getting a Bitcoin ETF.
Jake Chevinsky Back the Withdrawal Decision
American lawyer at Kobre & Kim and popular Bitcoin commentator Jake Cervinsky has backed the CBOE’s decision to withdraw the ETF proposal. Speaking to CoinDesk, Chervinsky said:
“The ETF sponsors made the right decision to withdraw their proposal,” going on to note that “the shutdown was the final nail in the ETF’s coffin, since the SEC doesn’t have enough staff members available to review or approve any proposed rule changes right now.”
He further added:
“Withdrawing the proposal stops the SEC from issuing another order saying the bitcoin markets aren’t ready for an ETF. The decision to withdraw is a decision to ‘live to fight another day’ – Jan Van Eck has said he will re-file the proposal after the shutdown, so he probably wanted to avoid setting a new precedent that would make it harder to succeed in the future”.
The good thing is that Bitcoin and the overall market is unfazed by the recent withdrawal. Bitcoin (BTC) is currently trading flat with minor movement. At the press time, Bitcoin is trading at $3571.96 with a market cap of $62 billion.