The Securities and Exchange Commission (SEC) postponed its take on the VanEck/SolidX bitcoin (BTC) exchange-traded fund (ETF) proposal on 20 May.
This move by the regulatory giant indicates that it is still not ready to see crypto-based funds being traded on regulated exchanges. However, considering the interest towards cryptocurrencies in the market, SEC is expected to take favorable steps later in the year. The SEC has scheduled a 35 day period for collecting more information and viewpoints on the proposal. The Chicago Board Options Exchange (CBOE) executed the filing last year.
The SEC cited in the report –
“The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,’ and ‘to protect investors and the public interest.”
SEC clarified that in the latest filing, it has listed 14 questions open to the public about the proposal. The purpose of these questions was to use the answers and feedback provided to help them reach a verdict. The questions are targeted to protect the general public investors from fraud and similar compromises. The SEC had previously withheld its decision on the similar Securities Act making the regulatory body delay its decision twice.
An ETF is a type of financial instrument that is coupled to the price of an underlying asset. A Bitcoin ETF would track BTC as the underlying asset. Both VanEck and SolidX had tried to register their ETF in separate attempts but had failed. When the two firms collaboratively endeavored to secure a bitcoin ETF, this was recognized as one of the strongest industry ventures.
In April, personnel from the SEC shared a public statement on contract analysis of digital assets. The statement commenced by conveying the varied uses for blockchain and distributed ledger technologies. These innovations have helped in creating financial instruments that almost copy the operations of traditional securities. Such financial handouts in crypto space are mostly in the form of tokens.
The VanEck/SolidX fund distinguishes itself from the Winklevoss Brother’s ETF attempt by laying more emphasis on insurance. The improved fund is reported to be derivative-backed, which implies that the firms would actually hold BTC. This would hopefully protect investors against the theft or loss of digital assets. To summarize broadly, the funds are recognized as a step towards the mass adoption of cryptocurrencies.