Shearman & Sterling | FinTech | SEC Again Delays Bitcoin ETF Decision
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  • SEC Again Delays Bitcoin ETF Decision

    On September 20, 2018, the Securities and Exchange Commission (SEC) in a filing said that it is seeking additional comments on a proposed rule change requested by the Cboe BZX Exchange that would allow it to list and trade shares of an exchange-traded fund (ETF) issued by the VanEck SolidX Bitcoin Trust.  This is the second time the SEC has delayed a decision on the proposal, which was first proposed on June 20, 2018.

    In the filing, the SEC noted that although it has already received over 1,400 comment letters, it wanted to seek more information before taking action. Accordingly, the SEC requested additional feedback from market participants on 18 topics, including bitcoin’s susceptibility to manipulation (and whether it is more susceptible to manipulation than other commodities), valuation of the fund’s holdings, surveillance, market liquidity and over-the-counter bitcoin trading generally, among other things.

    Any additional comments on the proposal must be submitted within 21 days of publication of the SEC’s filing in the Federal Register, and any market participant who wishes to file a rebuttal to another submission must do so within 35 days of that date.  

    Given the number of comments and apparent disagreement among SEC commissioners and market participants, it could be some time before the SEC decides whether or not to approve the application.  The participation of the fifth recently-confirmed Commissioner, Elad Roisman, may affect how the SEC analyzes this and other applications to list bitcoin-related ETFs.