Predictably, the SEC has decided to take some more time before giving a definitive answer regarding Cboe and VanEck’s request for the issuance of bitcoin ETFs on the US market.
Yesterday, it released a document in which the SEC announced that it was initiating a new proceeding to allow further analysis of the proposal, in particular with regard to compliance with the legal standard that requires the rules of a national stock exchange to be “designed” to prevent fraudulent and manipulative acts and practices.
It adds that the initiation of this procedure serves to encourage interested parties to provide further comments.
The document also contains a series of questions addressed to commentators, the first of which not surprisingly relates to possible market manipulation, and issues concerning compliance with the above-mentioned legal provision.
In fact, one of the SEC’s absolute biggest concerns about the possible issuance of an ETF on bitcoin specifically relates to possible market manipulation.
Moreover, after what happened in early 2021, and in particular because of Elon Musk’s tweets, the SEC’s concerns don’t seem far-fetched at all.
ETFs would in fact allow thousands, or perhaps millions, of small retail investors to take positions on BTC prices, but if the price could be easily manipulated with a couple of tweets from some major influencer, these financial instruments commonly used even by retail investors could be exploited to effectively siphon off their capital.
In total, the SEC raises five fairly precise questions, on which it is asking for further explanations from Cboe and VanEck.
When will the SEC decide on bitcoin ETFs?
There will now be 21 days to respond to these questions, starting from the moment the document is published in the Federal Register, and 35 days from the same moment to send additional comments from other parties as well.
However, it should be noted that this is essentially standard practice for the SEC, which often acts in this way. In fact, many people expected a further delay, so much so that it is possible that the SEC will take its time before taking a final decision, at the cost of postponing the decision for as long as it can.
However, this attitude does not reveal any fundamental opposition of the agency to bitcoin or this new financial instrument, but is simply part of its common practice in such cases.