Why Has the SEC Delayed the Bitcoin ETF Decision (Again)?

The bitcoin ETF timeline just got longer. The Securities and Exchange Commission (SEC) has kicked the can down the road, setting a new Bitcoin ETF decision date of 27th February.

The exchange-traded fund (ETF) in question is the much-anticipated VanEck and SolidX collaboration, cited by many as the best chance of securing approval.

Unfortunately, the SEC, which has delayed this decision numerous times through 2018, needs more time to consider the application:

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.”

Background reading: What is a Bitcoin ETF?

Why Has the SEC Moved the Bitcoin ETF deadline?

The simple answer is that it can. The SEC may take up to 180 days to deliver an approval or disapproval. If required, they can also extend that period an additional 60 days.

With the VanEck and SolidX proposal submitted in July, the SEC is simply taking as much time as possible to consider all angles.

The SEC has also invited comments on the ETF, suggesting it is taking the review seriously.

The Delay Could be a Good Thing

The SEC is well within its rights to reject the bitcoin ETF proposal. You may remember the Commission rejected nine proposals back in August.

The fact that the SEC is taking the full time period to consider the VanEck proposal is a good sign.

There are pro-bitcoin commissioners involved in the decision, including Hester Peirce who said, “You all know that I am working on trying to convince my colleagues to have a bit more of an open mind when it comes to [crypto].”

SEC Concerns Remain

Having said that, the SEC still has major concerns over bitcoin ETFs. As the chairman of the SEC recently revealed, there are issues related to theft, market manipulation, custody, and money laundering that need to be addressed before we see an approval.

There is also concern over how ETFs track the price of bitcoin.

The three options include basing the price on crypto exchanges, bitcoin futures, and the bitcoin OTC market.

The SEC is nervous that exchanges are subject to manipulation. They think bitcoin futures are not yet mature enough, and OTC markets are difficult to track.

So there are big hurdles to overcome before the SEC approves any Bitcoin ETF proposal.

It Could Take Years

Speaking after the decision, Hester Peirce warned the crypto community not to place too much weight on the ETF approval.

“Don’t hold your breath. I do caution people to not live or die on when a crypto or bitcoin ETF gets approved.”

She went on to say that approval could come tomorrow or in ten years. However, she did say that institutionalization of bitcoin is building. With Nasdaq and Fidelity wading into crypto trading, the building blocks are in place.

We just need some patience.

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Ben Brown

Editor, Block Explorer News

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