Many respondents have filed their comments with the US Securities and Exchange Commission (SEC) regarding its new proposed rule change for the approval of the VanEck/SolidX Bitcoin ETF. The commission allowed the general public to submit their comments between Feb. 13 and March 12, and so far, most of the respondents have filed negative comments regarding the proposed changes.
Earlier this year, CBOE’s BZX Equity Exchange that is expected to list the Bitcoin ETF announced that it had temporarily withdrawn its request for a rule change on the BTC ETF by the SEC. In its official announcement, the company revealed that the partial shutdown of the US government had led to the withdrawal of their application. However, CBOE reapplied to the SEC towards the end of January.
In the middle of last month, the commission announced that it would soon start the official countdown period to either approve or discard of the Bitcoin ETF and asked for feedback from the general public regarding the situation.
However, the comments submitted so far have been against the approval of the Bitcoin ETF proposal by VanEck/SolidX. So far, seven comments have been filed, and six are firmly against the move, urging the SEC not to go through with the approval.
Sami Santos filed a comment on March 12 and is so far the only one to make a positive comment towards the Bitcoin ETF approval and the positives it would bring to the cryptocurrency sector. Santos gave some clear reasons why the SEC should not disapprove of the proposal, stating that “[Disapproval of] an ETF because of manipulation and […] the protection of investors is contradictory, because without an investment fund the investor is susceptible to buy bitcoins in deregulated exchanges and lose their investments.”
Santos pointed out that VanEck offers insurance that could cover possible losses, adding that such an approval would lead to greater market security since it would increase liquidity and transparency in the crypto space, while also ensuring the safe custody of assets. All these advantages would play a significant role in convincing institutional investors to venture into the market, Santos added.
Sam Ahn gave the lengthiest comment on why the commission should reject the ETF proposal. The criticism focused on the lack of intrinsic value by Bitcoin, with Ahn accusing the VanEck/SolidX and the original Bitcoin whitepaper of exaggerating the computation complexity involved in the mining of BTC. Ahn claims that the cryptocurrency works like a moat around the caste of mining, which is designed to keep people away from the reality of the cryptos.
The other negative comments echoed the sentiment made by Ahn, alleging that the cryptocurrency lacks value as a financial product. The comments also touched on Bitcoin’s volatility and the case of market manipulation by a few participants.
D. Barnwell, one of the respondents, argued that the blockchain technology is the game changer and not Bitcoin. He stated that “I would ask the SEC […] to take a ‘watch and wait approach’ […] [t]he true game changer is the underlying technology Blockchain, not the cryptocurrency. And to make inroads into this industry-changing technology, one does not need to have a financial product based on the cryptocurrency.”
Despite the negative comments, the SEC chairman Jay Clayton recently noted that there could be a scenario where a Bitcoin ETF could satisfy all the regulations put in place. He stressed that blockchain technology is showing a lot of promises in some areas that coincide with their approach towards raising capitals.
The SEC has been encouraging industry leaders to participate in the review as it reconsiders its existing custody regulations and how they would apply to digital assets trading.