How is CBOEs Bitcoin ETF application different from Winklevoss’
Earlier last week, the United States Securities Exchange Commission rejected the Winklevoss twins’ Bitcoin ETF application for the second time in the span of two years. Their application lost to a 3-2 majority at the SEC, following which the SEC released a 92-page report stating the reasons why.
The entire report boiled down to three reasons; loosely worded proposal, concerns about the lack of liquidity and the fear of price manipulation. In the report, the SEC has pushed very hard on the fact that they are rejecting the application in the interest of all parties involved and not because of any animosity that the regulatory body harbors for Bitcoin and the cryptocurrency market.
Shortly after the decision was announced, the Commissioner of the SEC came out on social media and made a statement, chalking out her disapproval of the decision and how she thought it would be a block to innovation more than anything else.
The SEC’s Reasoning
The Winklevoss Bitcoin ETF application was rejected earlier this week for the second time in two years. The SEC released a lengthy report on why which ultimately boiled down to three or four major reasons;
- The proposal was loosely worded and there was no security or insurance that was discussed in the event of a consumer facing losses. And the SEC by using this reason to reject the application, further said that it was doing so in the interest of safeguarding and protecting the assets and capital of retail investors.
- The Winklevoss proposal said that they would supply the Bitcoin from their own exchange itself for the ETF. This was a cause of major concern to the SEC because they feared the lack of liquidity of the exchange could adversely affect the ETF process.
- The last reason seemed like a common statement that the SEC has pushed repeatedly when it has come to the cryptocurrency market; the fear of price and market manipulation.
- The SEC further went on to iterated, repeatedly, that they were not shooting down the possibility of ever approving an ETF because of some sort of hidden agenda against the cryptocurrency industry, but just that its approval was coming at this time, not for this particular ETF.
But the cryptocurrency community seems to have taken this rejection very well because they have multiple irons in the fire, with at least another five or six ETF applications up for consideration, out of which one application holds a lot of promise. The entire community has their hopes of an approval on CBOE’s Bitcoin ETF application of behalf of VanEck and SolidX. Here’s why.
CBOE’s Bitcoin ETF Application
The Chicago Board Options Exchange, on behalf of VanEck and SolidX, has also filed for an ETF license. And this seems to be the community’s most promising iron in the fire because this combining of forces may be just what the cryptocurrency community needs to tip the scale in its favor.
The joining of these two powerhouses in their own right brings to the collaboration years and years of traditional trading experience on the part of John vanEck and critical experience in the development of financial technology and blockchain from SolidX. With the best of both worlds on the table, the community is pretty convinced that this application will go through because of the following reasons;
- There is a lot of experience on both sides of the table here, with VanEck having won multiple awards and accreditations from his trading past and SolidX being a New York based firm that works on financial technology.
- The Chicago Board Options Exchange and the SEC have had a very good history when it comes to approvals of applications in the past and the community is banking on that good faith for the future and this application in particular as well.
- The application that the CBOE has submitted has been worded and written very carefully after having done a lot of research into how approved applications have looked in the past. The application has been quite skillfully written which just may make the difference
- The CBOE’s application talks about insurance and security for losses that their customers may face, which is one of the main stress points that the SEC has been worried about in the past. The importance of security comes up with the SEC because they need to protect the interests of retail investors and a proposal without a contingency in a market so volatile, is a bad sign.
- The SEC on the 2nd of July released the VanEck and SolidX application on their website for public comments, which may be taken as a sign that the SEC is leaning towards approving the ETF application.
The final decision, as always, lies in the hands of the SEC. The Winklevoss application was voted out with a minor majority of 3 against 2 and incidentally this is the second time the same proposed application has been rejected. However, this time around, in the case of CBOE’s VanEck-SolidX Bitcoin ETF application the community seems to be a little more optimistic.