The SEC’s Decision on the VanEck SolidX Bitcoin ETF Could Be Delayed Until 2019

The crypto community has been buzzing this past week with rumors that the SEC could approve a bitcoin ETF before the end of summer. According to a securities regulations expert, however, we may have to wait until 2019 to get a decision on at least one major bitcoin ETF.

The VanEck and SolidX bitcoin ETF is one of the most promising exchange traded funds seeking approval from the SEC. It’s not one of the five ETFs that the SEC has delayed until September 2018.

As reported by Bitcoinist.com, legal expert Jake Chervinsky took to Twitter on July 24 to clear up some of the confusion on when the SEC will decide on CBOE’s VanEck/SolidX bitcoin ETF proposal.

0/ It kills me to tweet about SEC rulemaking procedures, but given the confusion on #crypto twitter today, it feels necessary.

TL;DR — the SEC can, and probably will, delay its decision on the VanEck/SolidX commodity-backed #bitcoin ETF until ~February 21, 2019.

Thread.

— Jake Chervinsky (@jchervinsky) July 24, 2018

“It wills me to tweet about SEC rulemaking procedures, but given the confusion on #crypto twitter today, it feels necessary,” explained Chervinsky. “The SEC can, and probably will, delay its decision on the VanEck/SolidX commodity-backed #bitcoin ETF until ~February 21, 2019.”

Chervinsky is a legal expert specializing in government enforcement defense and securities litigation. In a thread of follow-up tweets, he explained how and why the SEC could delay its decision on the bitcoin ETF until February 21, 2019.

In fact, the decision could be delayed as late as March 4, 2019.

The reason, Chervinsky explains, isn’t specific to bitcoin-related difficulties. Instead, it’s a blend of confusion about crypto-assets as well as ongoing confusion on how ETFs are regulated:

“Unlike other types of funds (like mutual funds, closed-end funds, etc.), the federal securities laws did not originally provide for ETFs. As a result, ETFs have to obtain an individualized exemptive order from the SEC before going to market.”

Before any ETF is approved by the SEC, it must go through a series of steps. The ETF must file a “proposed rule change” with the SEC, for example. The SEC then posts a notice of the filing in the Federal Register, then solicits comments from the American public. From that point forward, the SEC has 45 days from posting in the Federal Register to approve or deny the ETF.

The crypto community has heard a lot about the 45 day rule. The ETF was posted in the Federal Register in June, and the SEC is currently within the 45 day window.

However, that 45 day window is not as important as you may think. The SEC can extend that window multiple times Here’s how Chervinsky explains:

“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.”

If you do the math, then that means the SEC has a maximum of 240 days to approve or deny any ETF – whether it’s a crypto ETF or an ETF with traditional assets.

The VanEck and SolidX ETF was posted to the Federal Register on June 26. Based on the math above, we can expect the SEC to announce the first extension on the deadline on August 10 (45 days after the filing), with a second extension on September 24 (45 days after the first extension), and a third extension on December 23 (90 days after the second extension).

From December 23 forward, the SEC would have 60 days to ultimately approve or deny the ETF. There would be no more extensions permitted. If you add 60 days to December 23, you get a final deadline of February 21, 2019.

Chervinsky later posted a correction to his tweet: the SolidX / VanEck ETF was posted to the Federal Register on July 2. When calculating the deadline extensions above, that gives us a new final date of approval for the SolidX / VanEck ETF: March 4, 2019.

Ultimately, based on Chervinsky’s research and knowledge, we can expect the SEC to announce multiple postponements of the VanEck/SolidX ETF decision over the coming months. The first announcement should take place in mid-August, with a second delay announcement in early October. The third and final extension announcement will take place in late December or early January, and from that point, the SEC will have 60 days to approve or deny the ETF.

To make a long story short, we can expect a decision on the VanEck/SolidX bitcoin ETF by March 4, 2019 at the latest.

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