SEC Commissioner — Robert J. Jackson Jr. — recently detailed in an interview with Congressional Quarterly that he expects an SEC-backed Bitcoin ETF proposal to eventually be approved.
The SEC has already rejected numerous Bitcoin ETF applications, and CBOE recently refiled the VanEck-SolidX proposal following their withdrawal during the government shutdown. Commissioner Jackson’s comments were presented through excerpts supplied by Drew Hinkes — an Adjunct Professor at NYU Stern.
Well-Founded Denials for Previous ETF Applications
According to the excerpts, Jackson cites the denial of several Bitcoin ETF applications — particularly the Winklevoss ETF filing as not meeting required SEC standards for preventing fraud and manipulative acts and practices.
“The case that we had last year involving the Winklevoss trust, in my view, was not a difficult case. So there you had a situation where the risk for manipulation and for people getting hurt was enormous. The liquidity issues in the market were very serious.”
His statements mirror similar discourse by the SEC immediately following nine ETF rejections which cited that the liquidity of Bitcoin futures markets was insufficient to indicate the maturity of the market was satisfactory for supporting ETFs.
However, Jackson articulated how the SEC believes ETFs will eventually meet the standards required for the SEC’s stamp of approval — although not providing any definitive timeline.
“Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so.”
Bitcoin ETF proposals surged in the latter months of 2018, although they were all eventually rejected. However, firms seeking to launch Bitcoin ETFs have continued refiling in hopes of meeting the standards and becoming one of the first Bitcoin ETFs to go live. Proposals from large financial institutions like CBOE should only continue to lay the groundwork towards the first Bitcoin ETF.
Other recent applications for a Bitcoin ETF include Bitwise’s proposal in early 2019 following their 2018 denial.
A definitive timeline for the approval of Bitcoin ETFs remains unclear, but the continual refining and resubmission of proposals by multiple firms indicates that the first Bitcoin ETFs being launched in 2019 seems achievable.
ETFs would grant Bitcoin much more exposure on regulated exchanges to retail investors and financial institutions looking to speculate on Bitcoin’s spot price without actually owning the underlying asset. ETFs are enormously popular among investors, and the increased exposure to Bitcoin with reduced risk is viewed as a major step towards further awareness of the legacy cryptocurrency.