As expected the SEC announced a procedural move yesterday to delay a decision to either approve or deny the Van Eck/Solid X Bitcoin ETF submission. The announcement was made relatively quietly via a document dump late in the afternoon but didn’t make it past the ‘sharp pencils’ on crypto twitter.
Here is the full document inside of our article from yesterday, available to parse and evaluate: SEC Delays Van Eck Bitcoin ETF Decision
Based on a few hints and slight language adjustments that appeared different than other ‘delay decisions’ issued in the SEC/Bitcoin ETF chase, two of our sources at the CBOE ratcheted up their confidence in an ultimate approval.
One source discussed the language in the document:
“There is some nuance here and you have to read the entire 19 pages to pick it up…but there is a clear shift in what we believe is prior denials and this document. A very small adjustment in the number of times market manipulation and risk factors are used, and the following of a clear time clock and a long-form path to the final decision. Remember, several other Bitcoin ETF’s were surprisingly denied ahead of the final bell last month. Not the Van Eck submission. It was spared. Couple that with the follow-up, very public statements from Van Eck executives yesterday. You can see where this is headed and we remain confident.”
Our other source (who is always blunter) didn’t disappoint:
“This document and the clues in it, around it, and commentary after it has given us ‘sky-high’ confidence that this will be the first Bitcoin ETF product approved by the SEC. A change in language and the follow up by Van Eck executives after the announcement – almost as if this document was as good as an approval. Tea leaves are clear, but SEC will play out the clock and then approve. 2019.”
Some background on where these sources have previously seen this process going and ultimately ending:
“Some highlights from our conversation last night: “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.”
More highlights from this morning’s short discussion: “I think the obsession over last weeks disapproval and then ‘re-evaluation’ decision caused angst that is unfounded. 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, and even possibly a Fidelity crypto exchange 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.