A closely-watched proposal to list a bitcoin exchange-traded fund on the Cboe BZX Exchange was withdrawn Wednesday – and the ongoing partial shutdown of the U.S. government appears to be to blame.
As CoinDesk reported, the filing was “temporarily withdrawn”, according to VanEck VanEck director of digital asset strategy Gabor Gurbacs. He also said that “we are actively working with regulators and major market participants to build appropriate market structure frameworks for a Bitcoin ETF and digital assets in general.”
But Jan van Eck, the chief executive officer of VanEck, indicated on CNBC Wednesday that the shutdown’s impact on the Securities and Exchange Commission (SEC) hampered the process between regulators and those seeking the ETF’s approval. According to van Eck, the discussions around the proposal – initially submitted last June and subject to subsequent approval delays – “had to stop.”
Speaking to CNBC’s Bob Pisani, van Eck explained:
“So, you know the SEC is affected by the shutdown…we were engaged in discussions with the SEC about the bitcoin-related issues, custody, market manipulation, prices, and that had to stop. And so, instead of trying to slip through or something, we just had the application pulled and we will re-file and re-engage in the discussions when the SEC gets going again.”
Pressed by Pisani on whether the proposal would have been rejected anyway due to concerns about custody and bitcoin’s pricing, van Eck added that “we think we actually have pretty solid answers to those [questions], but we just need to really demonstrate it very, very clearly and convincingly to the regulators.”
“We were trying to do that but we obviously can’t have meetings while they’re shut down,” he added.
Jake Chervinsky, a lawyer with Kobre & Kim, told CoinDesk that, in his view, that “the ETF sponsors made the right decision to withdraw their proposal,” going on to note that “the shutdown was the final nail in the ETF’s coffin, since the SEC doesn’t have enough staff members available to review or approve any proposed rule changes right now.”
“Withdrawing the proposal stops the SEC from issuing another order saying the bitcoin markets aren’t ready for an ETF. The decision to withdraw is a decision to ‘live to fight another day’ – Jan Van Eck has said he will re-file the proposal after the shutdown, so he probably wanted to avoid setting a new precedent that would make it harder to succeed in the future,” Chervinsky wrote in an email.
The partial shutdown, which affects a number of government departments including the U.S. Treasury (of which the SEC is a part), began on Dec. 22 following disagreements over the funding of a proposed wall on the U.S.-Mexico border sought by U.S. President Donald Trump. It is the longest government shutdown in U.S. history.
Caught in the crossfire of the shutdown are a number of other projects in the crypto space, including bitcoin futures platform Bakkt and crypto trading platform ErisX, both of which are waiting for the Commodity Futures Exchange Commission – an independent U.S. agency that has also been affected by the funding lapse – for approvals.
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