While SEC’s Clayton acknowledged that Bitcoin businesses are coming closer to satisfying his concerns, he stated that there is “work left to be done” on Bitcoin ETF.
In his recent interview, SEC Chairman Jay Clayton said something interesting. He claimed that the market has taken some action regarding the talks with the U.S. Securities and Exchange Commission’s (SEC) who is pretty worried about approving a Bitcoin exchange-traded fund (ETF). However, he added, there is still “work left to be done”.
He continued on saying:
“Those were not trivial questions. How do we know that we can custody and have a hold of these crypto assets? That’s a key question. And an even harder question, given that they trade on largely unregulated exchanges, is how can we be sure that those prices aren’t subject to significant manipulation.
Now, progress is being made but people needed to answer those hard questions for us to be comfortable that this was the appropriate type of product.”
Last year the chairman was saying that worries about price manipulations were a key delay for the financial product’s green light, together with the questions about the ways the custody operates.
In May this year when speaking about Bitcoin he said that what we are seeing in the ICO space is people not following either the private placement or public rules.
“Rather, they are taking the most advantageous pieces of a public offering…and providing none of the protections you can get in a private placement and somehow saying this was ok because it is a new technology. It didn’t take me very long to figure out this was not a good idea.”
Clayton’s comments come just weeks before the SEC is obliged to approve or reject a pair of Bitcoin ETF proposals.
One of them is Bitwise Asset Management, and they filed one of the proposals with NYSE Arca. Through this and the last year, they have been publishing numerous reports all in effort to convince the SEC that the market is mature enough to support such a product.
Just for reminder, latest ETF application was proposed in January of this year, and in August, the regulator postponed its decision on the proposal – together with two other crypto ETF proposals – with the deadline for the ruling currently set for Oct. 13.
Offering Bitcoin ETF-Like Product to Institutions
The second proposal was given by VanEck/SolidX in cooperation with Cboe BZX. This proposal was filed in 2018 and was seen as a strong competitor that actually could become the first bitcoin ETF approved by the SEC. Be it as it may, they decided to pull back during the prolonged government shutdown of early 2019 and re-file. The SEC faces a final deadline of Oct. 18 for this one.
While waiting for an ETF approval, VanEck Securities together with SolidX Management revealed they decided to take somehow different way in order to go round the regulatory barriers. The companies will try to use SEC immunity that will allow shares in their VanEck SolidX Bitcoin Trust to be offered to institutions such as hedge funds and banks, but not to retail investors.
Ed Lopez, head of ETF product at VanEck, said that the offering “allows for shares to be created and redeemed like ETFs, but it is not an ETF.”
“Unlike an ETF it isn’t listed on a national exchange, rather it is quoted on the OTC Link ATS platform. This is a first-of-its-kind type of offering. Given it will trade over-the-counter via broker-to-broker transactions, we’ve been casually referring to it as a Broker Traded Fund, a BTF.”