The Securities and Exchanges Commission (SEC), led by former bankers lawyer Jay Clayton (pictured above), has delayed an application by Cboe to list an ETF issued by the VanEck SolidX Bitcoin Trust.
Under delegated authority, Eduardo A. Aleman, Assistant Secretary at the Sec, justified the delay by stating they need “sufficient time to consider the proposed rule change.”
Nearly two months is not sufficient for this bureaucracy, which has been considering Bitcoin ETFs since 2013, with one of them denied by a 3-1 Commissioners vote on July 27th.
Aleman says that for the Cboe ETF they have “received more than 1,300 comments on the proposed rule change.”
Unlike the denied ETF, this one is limited to accredited investors only, with only the very rich able to participate if it ever gets the green light.
Something which appears to have almost no chance, at least for now. That’s because in their denial decision SEC said the majority of bitcoins need to be traded on regulated markets for the ETF to be approved.
They do not consider Coinbase to be regulated, or Japanese exchanges or South Korean exchanges which are regulated by any meaning of that word.
SEC, however, has a special definition of regulated. Only exchanges that are overseen by Sec or CFTC fall within such definition. That means only Cboe and CME futures are regulated at this stage as far as Sec is concerned.
This delay in making a decision, therefore, was very much expected, and while Aleman says they need more time to consider it, what he probably means is that they’re not quite happy to approve it at this stage and for them to become happy Cboe needs to make some changes with some of the required changes being very much outside of Cboe’s control.
There is however a chance, within the realms of possibilities. Jay Clayton will probably always say no, but he is just one out of what is meant to be five commissioners.
Robert Jackson is another commissioner, and he seemingly sided with Clayton. As did Kara M. Stein, but her term has expired and is now to be replaced very soon.
Hester Peirce voted in favor of approving the ETF. All thus hangs on the two new commissioners who are making their way through the process. If both of them are favorable to this space, then a bitcoin ETF might be able to go through in a 3-2 vote, but that’s a lot of ifs.
Anger is growing at the SEC, however, and not just within this space. Musk’s decision to take Tesla private may well lead to many pointing fingers at the Commission, which has failed to adapt to the digital age.