The next Bitcoin ETF decision is this month. The deadline for the CBOE-backed VanEck ETF proposal decision by the Securities and Exchange Commission (SEC) is Sept. 30. The SEC has declined numerous ETFs so far. Direxion has had five ETFs rejected. GraniteShares and ProShares have had two ETFs each rejected.
Is it because the organization proposing the ETF was not fit to implement the product? Is it backed by an unstable product? Have they been lacking the wrong partnerships? The CBOE-backed VanEck-SolidX ETF proposal ticks many of the boxes which were reasons for rejection in the past.
Winklevoss Twins ETF Proposals
Winklevoss twins Cameron and Tyler are now actually barred from establishing a Bitcoin ETF. The twins who are well known for their link with the beginning of Facebook have since entered the cryptocurrency industry and have founded Gemini Exchange. The Winklevoss twins both proposed a Bitcoin ETF and appealed the rejection decision. The cryptocurrency market crashed on news of both the rejection and appeal. The SEC denied their application over concerns of market manipulation.
ProShares, Direxion and GraniteShares ETF Proposals
The ProShares ETF was denied on Aug. 22 and stood little chance of approval. The ETF was going to incorporate leverage in an already volatile asset class. The ETF was also going to be backed by nine-month Bitcoin futures. With futures price varying from spot price and being a volatile instrument in itself, this proposal was a clear no for the SEC with them delivering the rejection a day early.
The Direxion and GraniteShares ETFs were also proposed to be backed by Bitcoin futures. The Bitcoin futures product only started trading on the CME and CBOE late last year. The SEC was concerned about manipulation in all cases and also noted the small size of the Bitcoin futures market as a reason for concern.
This is the most recent ETF proposal and has the greatest chance of being approved. The SEC extended its deadline for the final decision on this to the 30th of this month, indicating that they consider the submitted materials important. There are three key factors that give this ETF proposal a better chance of approval than those that preceded.
Firstly, the ETF is supported by the Chicago Board of Exchange BZX Equities Exchange (CBOE), which drastically improves the chances of approval. CBOE has already launched Bitcoin futures products. With robust infrastructure and a long history of institutional trading, the market manipulation concerns of the SEC should be addressed.
Secondly, the ETF is proposed to be backed by real Bitcoin, which will make it distinctly different from any of the previous ETF proposals.
Thirdly, VanECK has been established since 1995 and has a stellar reputation in the investment industry. Combining VanEck with crypto start-up SolidX means a killer team. The deadline for the decision of the ETF is Sept. 30, but the SEC has the discretion to delay the decision further if they wish to do so.
Discussions about a Bitcoin ETF have been ubiquitous since last year. If VanEck-SolidX fails to get approved, other applications will arise in their place. Bitwise Asset Management Inc., which already has an index fund, has been long planning for an ETF proposal.
There has also been a recent discussion of a Coinbase–BlackRock partnership for an ETF proposal, which would combine two of the superpowers in investment and cryptocurrency. BlackRock was an early pioneer of the ETF market and would be aware of all the aspects that a product would need to be approved.
It’s not a question of if there will be a Bitcoin ETF. It’s a question of when.