The Cboe BZX Exchange withdrew its proposed rule change Wednesday that had aimed to clear the path for a Bitcoin exchange-traded fund (ETF). The proposal, part of the combined ETF bid with VanEck and SolidX, was first lodged with the U.S. Securities and Exchange Commission (SEC) in June 2018 and faced several postponements before the Cboe finally pulled the plug with a month remaining until a final decision.
Jan van Eck Confirms Decision
Various reasons for the withdrawal began circulating in social media immediately, with many focusing on the US shutdown grinding progress to a halt, something that VanEck CEO Jan van Eck later confirmed on CNBC’s ‘ETF Edge’ show:
We were engaged in discussions with the SEC about the Bitcoin-related issues, custody, market manipulation, prices, and that had to stop, and so instead of trying to slip through or something we just had the application pulled and we will re-file and re-engage in discussions when the SEC gets going again.
Prior Confusion over Deadline Action
There had been some confusion in the last few days regarding the impact of the government shutdown onthe SEC. Some thought the application would be automatically rejected come deadline day, while some thought it would be automatically accepted with the possibility of later revision. Prominent securities lawyer Jake Chervinsky had cleared the confusion up with a series of tweets last week, confirming that the application would have been accepted on February 27, but would likely have been delisted once the SEC came back to work following the shutdown. Clearly, this would not have been something that the Cboe, VanEck, or SolidX would have wanted to deal with, and so the decision to temporarily withdraw the request is understandable and sensible.
Market Fails to React
Previous ETF delays have caused huge drops in Bitcoin’s price, but the response yesterday was minimal with barely a murmur on the charts. This suggests that the news was expected by the market and was already reflected in the price. When the re-filing will take place is in the hands of the country’s lawmakers, but the longer the shutdown goes on is the more the work piles up and the longer it will take the SEC to get back to discussions with VanEck, SolidX, and the Cboe. Pull up a chair folks. We could be here some time.