Could a bitcoin ETF finally see approval this week?
Well, I wouldn’t get too excited, but we have reached another important moment in the bitcoin ETF decision process.
November 5th marks the deadline for public comments on nine proposed ETFs. After today’s deadline, the Securities and Exchange Commission (SEC) will make a decision to approve or deny.
So, what do you need to know?
1. The Nine Bitcoin ETFs Were Previously Rejected
All nine were rejected back in late-August.
The reasons for rejection were not rooted in concerns over bitcoin itself. Rather, the SEC is worried about manipulation, fraud, and a comparatively small market size.
Further reading: What is a Bitcoin ETF? (And Will it Trigger a Bitcoin Price Surge?)
2. The SEC Decides to Review the Decision
In a strange twist, SEC Commissioner Hester Pierce tweeted shortly after the initial rejection. She implied the decision was made by SEC staffers, and the Commission would now review the applications on a higher level.
3. New Rules Introduce Public Comment
At the same time, the SEC introduced a new process whereby “interested parties” were invited to comment on the proposed bitcoin ETFs.
“Accordingly, IT IS ORDERED, pursuant to Commission Rule of Practice 431, that by November 5, 2018, any party or other person may file a statement in support of, or in opposition to, the action made pursuant to delegated authority.”
The deadline for these public comments is November 5th.
The SEC may, therefore, reveal its decision at any point in the coming days, weeks, or months.
4. “Godfather of ETFs” Says Approval is Coming “No Time Soon”
Reggie Brown, the so-called “Godfather of ETFs” and senior managing director of Cantor Fitzgerald (a prominent ETF firm) is bearish on the prospects of an ETF approval.
While speaking at a Georgetown University conference last week, he said, “it’s very difficult for the Commission to wrap their heads around a positive approval because there’s no data yet…the markets just aren’t here.”
5. Approval in 2019?
It’s widely considered that forthcoming ETF proposals from VanEck and Solid X have a better likelihood of approval. Not only are they based on physical bitcoin (rather than bitcoin futures contracts), the two companies have significant experience with launching and running ETFs.
While their initial proposal was rejected earlier this year, the group will submit a follow up in 2019.
We expect to hear a decision from the SEC in the coming days or weeks, but don’t hold your breath. The bitcoin and cryptocurrency market has not sufficiently evolved since the previous rejections, so we’re unlikely to see a change of heart just yet.
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