Bitwise ETF was postponed, VanEck did not, is the ETF coming?

The writer is Jake Chervinsky, a US government practice defense lawyer who has been concerned about the progress of the Bitcoin ETF.

The US Securities and Exchange Commission postponed Bitwise's Bitcoin ETF application last week, but has yet to make a decision on VanEck's application. This time, everyone still does not have much illusion about the approval of the Bitcoin ETF. If the US Securities and Exchange Commission does not postpone the VanEck Bitcoin ETF proposal, the most likely outcome is a veto, not an approval. This article will explain why this is a bad sign for those who are optimistic about ETF approval.

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The Bitwise and VanEck proposals were announced in the Federal Register on February 15 and 20, respectively, and indirectly told investors that the US Securities and Exchange Commission reviewed the deadline for ETFs. Time to enter last week's New York blockchain week, Bitwise and VanEck are facing their first 90-day decision period, and the SEC will approve, veto or postpone their ETF applications. The Bitwise deadline is last Thursday and the VanEck deadline is this Tuesday. I have predicted that both will be postponed and give their own quantitative judgment: delay, 90%; rejection, 9%; approval, 1%.

If both proposals are postponed, it means that the new round of deadlines is August 14 and 19. Last Tuesday, two days before the Bitwise deadline, the US Securities and Exchange Commission decided to postpone its decision and give reasons for disapproval. However, the SEC only postponed Bitwise on the day, and it did not (and has not yet) decided on VanEck's application. This is really unusual.

In the past, the US Securities and Exchange Commission usually announced its decision on all ETF applications on the same day. For example, when the SEC postponed a decision on Bitwise and VanEck's application in March, it also issued two delayed decisions. Similarly, last year, the SEC rejected three different ETF proposals, even if the deadlines were several weeks apart (and the deadline for this Bitwise and VanEck was only five days apart).

Therefore, if the US Securities and Exchange Commission plans to postpone VanEck, it should be issued at the same time as Bitwise's decision. Currently, this does not mean that the SEC will approve or reject VanEck.

But between these two options, veto is more likely than approval. Here are the reasons for the author:

First, if the SEC vetoed after six years of veto, without spending all the time allowed by the law (in the case of an ETF application to the final initial decision, a total of 240 days, but only 90 days) The first Bitcoin ETF was approved, which is very surprising. Making the most of the time will make the SEC look thoughtful and thorough. VanEck's deadline is October 18. A decision made before this point in time may mean a veto.

Second, market conditions do not support early approval of ETFs . Recently, bitcoin prices have fluctuated widely, and investigations related to fraud and manipulation have also increased (such as the Attorney General of New York and Bitfinex). The US Securities and Exchange Commission has no reason to support Bitcoin ETFs in this environment.

Third, and most importantly, the delay in Bitwise's application essentially eliminated the possibility of early approval. The SEC cited several reasons for disapproval, which apply to the entire Bitcoin market structure and therefore to VanEck . For example, Bitwise was asked about the nature of the bitcoin market, the efficiency of the market, the market's sensitivity to manipulation, and the similarities between the market and other commodity markets. If the SEC believes that all of these issues are grounds for the Bitwise ETF, then it will certainly see them as reasons to reject the VanEck ETF. Therefore, if VanEck is still likely to approve, the US Securities and Exchange Commission will also post VanEck's application and throw all these issues to VanEck.

So why does the US Securities and Exchange Commission delay Bitwise and reject VanEck?

These two ETFs are actually completely different. For example, they calculate prices in different ways: Bitwise will use the price of the encrypted exchange, and VanEck will use the price of the over-the-counter market. Maybe the US Securities and Exchange Commission is only willing to consider one of them.

However, frankly, the SEC's delay in Bitwise and silence on VanEck may not mean anything. Perhaps the US Securities and Exchange Commission has only issued a postponement order for VanEck. These things also take time, and the SEC does not mean that the ETF's postponement decision must be made at the same time.

The author still believes that postponement is the most likely outcome. But if it is not postponed, then all the signs indicate that it may be negative. The following is the author's point of view: postponed, 75.0%; rejected, 24.9%; approved, 0.1%.

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