On Tuesday (7 August 2016), the U.S. Securities and Exchange Commission (SEC) announced that it needed more time to make a decision regarding the VanEck-SolidX Bitcoin ETF, and it set 30 September 2018 as the new deadline.
Via a notice published on its website (“Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust”), the SEC said that on 20 June 2018, Cboe BZX Exchange (BZX) had filed with the SEC “a proposed rule change to list and trade shares of SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust”, which got published in the Federal Register on 2 July 2018.
Since the SEC had 45 days from the date of publication in the Federal Register to make a decision, this means that many people in the crypto space expected a decision to be made by 16 August 2018. However, the SEC has now decided to exercize its right to extend this deadline by another 45 days to 30 September 2018, saying that it needs more time:
“The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change.”
Therefore, pursuant to Section 19(b)(2) of the Securities Exchange Act of 1934, the SEC decided to designate “September 30, 2018, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change.”
Jake Chervinsky, who is an American lawyer (an asociate at the law firm of Kobre & Kim) specializing in securities litigation, had this to say on Twitter about the SEC’s announcement:
Expected result, earlier than expected execution.
New deadline: Sunday, September 30, exactly 45 days from the prior deadline of August 16. I had predicted October 1, thinking the SEC would carry the deadline over to the next Monday.
I expect another extension to December 29. https://twitter.com/coindesk/status/1026917169781780481 …
Previously, on 24 July 2018, Chervinsky had published a series of tweets to explain the process the SEC uses to decide proposed rule changes for new ETFs:
2/ The timing of the ETF approval process follows a standard formula:
– the ETF files a “proposed rule change” with the SEC;
– the SEC posts notice of the filing in the Federal Register and solicits comments; and
– the SEC has 45 days from posting to approve or deny the ETF.
3/ Except the SEC doesn’t have to decide within 45 days. It can extend the deadline up to three times:
– 45 more days if “a longer period is appropriate”;
– 90 more days for the ETF to address grounds for disapproval; and
– 60 more days if again “a longer period is appropriate.”
4/ This means the real deadline for the SEC to approve or deny an ETF is 240 days after it files notice in the Federal Register (45+45+90+60).
Yet, because of how the law works, the SEC can’t just set a 240-day deadline from the jump. It has to do the extensions one at a time.
Then, on 25 July 2018, Chervinsky sent out another tweet to summarize the SEC deadlines, as he saw them, for the VanEck-SolidX Bitcoin ETF:
If my legal calendar skills are on point, it should be:
– published July 2
– 1st deadline: August 16 (+45 days)
– 2nd: October 1 (+45 days, carried to next weekday)
– 3rd: December 31 (+180 days from publishing, carried to weekday)
– final: March 4 (+60 days, carried to weekday)
Chervinky now says that we should expect the next three SEC deadlines regarding this ETF to fall on:
- 30 September 2018
- 29 December 2018 (i.e. 180 days from publication in the Federal Register)
- 27 February 2019 (this is the final deadline, since 27 February 2019 is 240 days from 2 July 2018)
According to data from CryptoCompare, as of press time, Bitcoin (BTC) is trading around $6,902. Prior to the announcement, at 20:30 (UTC + 01:00), BTC was trading around $7,104. About 40 minutes later, it had fallen to around $6,870, i.e. a fall of roughly 3.4%.
Featured Image Credit: Image Courtesy of VanEck