A legal expert, Jake Chervinsky, has stated that there is only a 10% chance that the proposed, commodity-backed Bitcoin ETF proposal of VanEck and SolidX will get approved. Jake made this statement after the SEC’s plan to approve the bitcoin ETF proposal last week became overdue.
Why the Bitcoin ETF Might Get Rejected
Surprisingly, the legal expert had previously predicted that the concluding decision to approve the VanEck/SolidX Bitcoin ETF proposal would be delayed into February next year. Some days ago, the SEC delayed its approval on the Bitcoin ETF and announced that the decision on the VanEck/SolidX Bitcoin ETF would be made on February 27, 2019. Following his correct prediction of the Bitcoin ETF delay, Jake has now, again, predicted that the ETF proposal had a 10% chance of being approved by the SEC.
The legal expert stated the reasons for the low chance of the Bitcoin ETF approval on a series of publications on Twitter. He stated that the biggest singular reason for the rejection of the proposal is market manipulation. He stated in the tweet that;
“The SEC had many concerns — enough for 18 multi-part questions. The most important question was about market manipulation. The SEC wanted to know if CBOE BZX (the exchange proposing the ETF) had ‘a surveillance-sharing agreement with a regulated market of significant size.’”
He further reasoned that the matter of market manipulation remained the most significant, citing the rejection of the Winklevoss ETF proposal in July 2018. Worthy of note is the fact that the SEC Commissioner, Hester Peirce held a different opinion and made that clear following the disapproval of the Winklevoss ETF proposal. The commissioner further added that the longer cryptocurrency ETFs were delayed, the slower it took for the crypto market to mature.
Jake also suggested that the fact that the Securities and Exchange Commission does not have any jurisdiction over digital currency exchanges is another factor delaying the Bitcoin ETF approval. The SEC, known for its almost obsessive control, cannot order exchanges to remit information that can allow it to detect market manipulation. In that manner, it can’t also ascertain if the exchanges commit fraud and all that adds up to a final decision in rejecting the Bitcoin ETF. He then concluded that on the matter of market manipulation alone, the bitcoin ETF had a 10% chance of being approved by the regulatory body.
The Politics behind the Alteration Approval Chances
Worthy of note is the fact that the rejection of the proposed VanEck/SoldiX Bitcoin ETF could lead to an appeal. And whenever an appeal is made, another set of commissioners different from those who rejected the Winklevoss ETF proposal would have to reconsider the chance of approval.
Regarding the Bitcoin ETF approval, there might be a good chance of approval as there are two Republicans, Peirce and Roisman, one Democrat, Jackson and a Chairman appointed by a Republican, Clayton in the commissioner lineup. John Galt, an analyst, has suggested that the current lineup could assist in the Bitcoin ETF approval this time. He stated that the Chairman in the lineup, Clayton, could side with the Republicans and get the Bitcoin ETF approved.