Good news for Bitcoin holders, traders and investors, within a week of temporarily withdrawing their joint CBoE VanEck Bitcoin ETF application, the CBoE has re-applied their proposal with the US Security and Exchange Commission. This is a major boost for the emerging digital asset that is not only grappling with throttling regulation but also from dropping asset prices as investors hold their investment waiting for a recovery. While confirming, the head of Digital Asset Strategy at VanEck, Gabor Gurbacs, conceded that it was through pure hard work from the team involved.
— Gabor Gurbacs (@gaborgurbacs) January 31, 2019
It seems like VanEck’s persistence and negotiation is paying off and their work towards creating a proper framework in line with SEC specification will finally convince the regulator. In a recent interview with CNBC, Jan Van Eck, the founder of the fund 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.”
At one point, the hopes of a Bitcoin ETF ever hitting the market had been put to questioned after a prolonged US government shutdown which had paralyzed normal operations of may US agencies including the SEC. With these bodies working with a bare minimum, the SEC announced that they were suspending and keeping most operations on hold but some staff members will be on the sideline to cater for “emergency situations involving market integrity and investor protection, including law enforcement.”
Investors, as well as institutions, are looking forward to a Bitcoin Exchange Traded Fund (ETF). Not only will the ETF allow unbridled inflow of institutional money deepening liquidity but there will be renewed confidence in the sphere because the ETF will be under the tight oversight from the US SEC.
What an #ETF brings to #Bitcoin:
-Increased liquidity via the AP & ETF ecosystem
-Lower counter-party risk
-Better valuation and execution practices
-Separation of duties: trading, custody, valuation
-Compliance with global regulations
-Asset mgmt experience pic.twitter.com/R1ACMd3EQ6
— Gabor Gurbacs (@gaborgurbacs) September 18, 2018
The SEC core mandate is to contribute towards US revenue generation by facilitating capital formation, maintain an orderly and efficient market but most important protect investors. It this last function that the SEC is hanging on insisting that the market is not ready for an ETF. Back in Nov 2018, the head of the SEC said he was not comfortable with the idea of a Bitcoin ETF not until he sees better market surveillance as well as top-notch custody for the underlying cryptocurrency, Bitcoin in this case.
“What investors expect is that trading in the commodity that underlies that ETF makes sense and is free from the risk of manipulation. We’ve seen some thefts around digital assets that make you scratch your head. We care that the assets underlying that ETF has good custody and that they’re not going to disappear. It’s an issue that needs to be addressed before I would be comfortable”
Because of the new re-application, the SEC still has the time to review the proposal. Initially, the deadline was set for Feb 27, 2019, but with the Government shutdown being a spoiler, the agency has 240 days. However, the countdown will be upon the application’s registration at the Federal Register. Therefore, it means the ETF will likely see light by end year.