According to the news report by Bloomberg, Cboe Global Markets Inc. took back its application to list the first Bitcoin ETF (exchange traded fund). The company blamed the government shutdown for this move.
Cboe announced this decision via a filing to the US Securities and Exchange Commission (SEC) on Wednesday. After the announcement, the price of Bitcoin dipped.
Most employees of the SEC have been put on furlough due to the partial government shutdown. This meant that there were no officials on staff who could review the rule change proposed in Cboe’s application. Due to this, the exchange’s application with the SEC has been in limbo.
Cboe’s deadline to take a decision about its ETF was almost up and the company needed to take action. The company issued an emailed statement that its decision to withdraw its application to list and trade the VanEck SolidX Bitcoin Trust shares was due to timing directly related to the shutdown of the American government.
The company also stated that it was planning to re-submit a filing in the future and was looking forward to continuing its discussions with the regulator. However, even if Cboe does re-submit its application for a Bitcoin ETF, the entire process would start from scratch.
Had this application been approved within the required timelines, a fund from SolidX Partners Inc. and VanEck Associates Corp. would have been able to list on Cboe’s BZX Exchange.
According to the report by Coindesk, the application had been filed in June last year. The investment firm VanEck partnered with the financial services providing company SolidX to offer a physically backed Bitcoin (BTC) ETF.
While this was not the first application filed with the SEC for a Bitcoin based ETF, it was the only one to back it directly on the cryptocurrency’s price. All the other ETF applications based their proposals on Bitcoin futures contracts.
The SEC had not been very comfortable approving applications related to the launch of Bitcoin based ETFs and postponed taking a decision on them multiple times. The regulator even asked for public comments and met with advocates of the projects to understand the proposals better.
The SEC had a deadline to give its decision on this particular application by February 27. However, with the shutdown of the US government, the entire process was then delayed.
The director of digital asset strategy of VanEck Gabor Gurbacs stated that the application had been withdrawn temporarily. He also added that the firm was actively working with key market participants as well as regulators to create an appropriate framework in the market for Bitcoin ETFs and cryptocurrencies in general.
The Chief Executive Officer of VanEck Jan van Eck, in an interview with CNBC on Wednesday, said that the proposal had been withdrawn and talks with the SEC had been postponed as a direct result of the government shutdown.
Van Eck also stated that they had been in discussions with the SEC on a number of subjects – issues related to Bitcoin, market manipulation, custody and prices in the cryptocurrency market. He said these discussions needed to stop and instead of trying to get in otherwise, they decided that it would best to just withdraw their application.
The chairman of the broker-dealer firm Lowenstein Sandler, attorney Ethan Silver explained this decision a little more clearly. He said that had the SEC been forced to a take a decision in this situation, it would have denied the application rather than being put in a situation where the agency would have had to approve the proposal on the basis of a technicality.