After more than a year of trying to gain the approval of the U.S. Securities and Exchange Commission (SEC), the Chicago Board Options Exchange’s (CBOE) BZX Equity Exchange has withdrawn its VanEck SolidX Bitcoin ETF application.
In June 2018, when VanEck, a New York-based investment management firm established in 1955, teamed up with SolidX, a fintech and software development company, to file for a physically-backed Bitcoin ETF with the SEC.
Since then, a decision on the VanEck SolidX Bitcoin ETF has been and delayed several times by the SEC as it sought clarification from VanEck and SolidX on matters.
The rescinding of the VanEck SolidX Bitcoin ETF application comes one month before the October 18 final deadline for the SEC to render its decision on the application.
Surrender or strategic retreat?
Neither VanEck nor SolidX has yet to provide a reason for the decision, however, there is no shortage of theories being bandied about within the crypto community.
One theory is that, in the wake of the launch of the ETF-like VanEck SolidX Bitcoin Trust 144A Shares product, they simply grew tired of waiting for the SEC to make up its mind.
Another theory – one that appears to be gaining traction – is that this is simply a strategic retreat on the part of VanEck ahead of an anticipated rejection by the SEC.
VanEck withdrew its bitcoin ETF proposal today, presumably expecting that the SEC would reject it next month. Bitwise's proposal is still pending (for now) & due for a final decision on October 13. My best guess — there will be no bitcoin ETF in 2019. 🙁https://t.co/cMamYkymk1
— Jake Chervinsky (@jchervinsky) September 17, 2019
Jake Chervinsky, a Washington, DC-based attorney and Adjunct Professor at Georgetown University Law Center believes that VanEck withdrew its Bitcoin ETF proposal on the presumption that the SEC was not going to approve it in October.
Also lending credence to the strategic retreat theory is that as recently as September 4, VanEck was still committed to pursuing a Bitcoin ETF.
At the time, VanEck head of ETF product Ed Lopez told CoinDesk:
“We still strongly believe the marketplace and many investors would be better served to have a regulated product out there and this is just one small step towards that and right now it happens to be only available to institutions.”
By choosing to withdraw its Bitcoin ETF application, no formal rejection has been issued by the SEC and no precedent for future rejection has been set.
VanEck is now free to re-submit its application at a later date, effectively resetting the clock with regards to how long the SEC has to make its decision.
Gabor Gurbacs, the director of digital asset strategies at VanEck, appeared to confirm that theory as he posted on Twitter yesterday that bringing a Bitcoin ETF to market is still one of the company’s top priorities.
We are committed to support Bitcoin and Bitcoin-focused financial innovation. Bringing to market a physical, liquid and insured ETF remains a top priority. We continue to work closely with regulators & market participants to get one step closer every day. https://t.co/bDYiSbTRVl
— Gabor Gurbacs (@gaborgurbacs) September 17, 2019
“We are committed to supporting Bitcoin and Bitcoin-focused financial innovation. Bringing to market a physical, liquid and insured ETF is our top priority. We continue to work closely with regulators and market participants to get one step closer every day,” he tweeted.
VanEck SolidX Bitcoin Trust 144A Shares
On September 5, VanEck and SolidX rolled out VanEck SolidX Bitcoin Trust 144A Shares, a bitcoin security that, according to VanEck’s website, “looks and feels like a traditional ETF.”
The Trust comes under the Rule 144A exemption that modifies the restrictions that the SEC places on the trades of privately placed securities.
Investopedia explains that, under this rule, “these investments can be traded among qualified institutional buyers, and with shorter holding periods—six months or a year, rather than the customary two-year period.”
The Trust, which is available only to institutional investors, is off to a rocky start as it has issued just four bitcoins to investors – valued at approximately $41,100 at the time of writing – in its first two weeks on the market.