On October 9th new SEC Commissioner Elad Roisman met with representatives from Van Eck, SolidX, and the CBOE to discuss the proposed Bitcoin ETF.
Roisman is the first commissioner to publicly meet with representatives of the three groups. The previous presentation was made to SEC staff, specifically the Office of Market Supervision and Division of Trading and Markets.
In the meeting with Commissioner Roisman arguments were made that the Bitcoin ETF should be approved as previous issues identified by the SEC are now resolved. Directly from the presentation:
•There now exists a significant regulated derivatives market for bitcoin.
•Relevant markets – Cboe, bitcoin futures, OTC desks – are regulated.
•Concerns around price manipulation have been mitigated, consistent with approval of prior commodity-based ETPs.
•Cboe’s rules are designed to surveil for potential manipulation of Trust shares.
•Promotes investor protection.
In September, Republican Elad Roisman was confirmed for a seat on the SEC Commission. Prior to his appointment, the commission had only 4 of the possible 5 seats filled.
Roisman is rumored to be friendly to crypto and free markets, similar to Commissioner Hester Pierce. Given Pierce was the only “yes” vote, approval would still require defectors.
Interestingly, a current “no” vote in Commissioner Kara Stein will disappear in December as her term expiration requires her to leave the Commission.
Democrat Allison Lee is rumored to be her replacement, but the gap between Stein’s departure and Lee’s appointment could be a potential opening for the ETF approval.
This leads us to our previous conversations with sources at the CBOE and their continued confidence in an eventual approval:
“The VanEck ETF is perfectly approvable if you have been reading the tea leaves in the rejection language at the SEC connected to previous submissions. It checks every box, as I’ve said before, and I’d be shocked, SHOCKED, if it didn’t win approval. Now that approval will probably come with a bunch of dissenting language amongst the respective approving members – but it will still get approved. Not backing down in any way, in fact, I’d double down on it at the moment.”
“…the SEC is first and foremost interested in investor protection with these types of new asset class submissions. VanEck has that issue covered in spades with zero leverage and accredited investor protections built into the product. That will win the day, eventually. Expect the rhetoric to ramp up and ‘warring factions’ to become more visible leading up to any decision early next year, but I remain imminently confident in an approval.”
Our sources at the CBOE have been consistent and resolute in believing that the Van Eck product has been and is the most likely candidate to make it to the finish line. Every step along the way the only question that they’ve grappled with is timing; never with the likelihood of approval.
A Bitcoin ETF should closely follow the Bakkt launch, the continued maturity of Bitcoin futures markets, Fidelity’s crypto initiative and Nasdaq’s push into the crypto ecosystem. Given all of that activity, a Bitcoin ETF approval in late Q1 of 2019 seems reasonable, even inevitable.