by Joseph Young
The Securities Exchange Commission has lived up to the community’s expectations once again by delaying the approval of the Winklevoss ETF for additional “public comment,” whereby Gemini has sought the help of State Street to move forward.
SolidX, another highly anticipated bitcoin ETF provider which gained serious momentum by granting insurance to its investors, also had its approval delayed by the United States SEC on September 14, which still can be delayed again for another 195 days depending on the SEC’s decision.
Although most experts in both the mainstream financial market and cryptocurrency industry presume that the debut of an ETF will most likely surge the price of bitcoin to new highs, the bitcoin community is concerned that ETF providers including SolidX LLC and the Winklevoss twins could potentially be forced to deal with months or even years of delay just to be declined by the SEC.
Currently, the optimistic views towards the launch of legalized bitcoin ETFs are based on an assumption that ETF proposals will most likely receive an approval by the SEC. However, considering the SEC’s inefficient verification and authentication process of ETF listings in general, the community shouldn’t anticipate a response of the SEC.
As of now, the listing process of an ETF is complicated, inefficient, and opaque. As Ignites, a Financial Times publication revealed in an exclusive paper, the SEC’s request for comment on the ETF listing process was heavily dominated by complaints from sponsors who claimed that the product-by-product review of ETFs is time-consuming and essentially, unnecessary.
“The current listing process slows the launch of new ETFs, creates different rules for similar products depending on the approval vintage, deprives investors of new opportunities and is an inefficient use of the SEC’s resources,” Investment Company Institute general counsel David Blass wrote in a letter later obtained by Ignites.
More importantly, the complexity and sophistication of an ETF proposal can hugely impact its approval process. For instance, the Winklevoss bitcoin ETF could take well over a year in the approval process due to the SEC’s lack of fundamental understanding of bitcoin and regulatory frameworks that surround the cryptocurrency.
An executive of BlackRock, the world’s largest asset manager with $4.89 trillion under management, also noted that there are no standards in the approval process of ETFs. The SEC has complete control in the system, which is not based on a clear set of policies or stages.
“Because Rule 19b-4 was not written with ETPs [exchange traded products] in mind, it has no clear standards or requirements for exchange listings of ETPs,” BlackRock vice-chairman Barbara Novick and managing director Ira Shapiro wrote.
Furthermore, the approval process becomes even disorganized because the ETF providers like SolidX and the Winklevoss twins are not a part of the reviewal phase. The ambiguity surrounding the proposal is instead dealt by the commission itself, which ultimately leads to a longer review process and approval phase, which is completely unnecessary and impractical.
If the SEC comes to a consensus that the concept of offering mainstream investors to purchase bitcoin is overly complicated, they can simply deny the application, and the proposing party will be required to undergo the entire year-long process over again.
To shorten the process, the Winklevoss twins recently entered into a strategic partnership with multi-billion dollar audit and financial services firm State Street to prove the legitimacy of their ETF proposal and filing. While it is still difficult to speculate the impact this partnership would have on the approval process, it will help the Winklevoss twins to convince the SEC that its bitcoin funds and trading methods are legitimate.