American lawyer Jake Chervinsky explains that despite the U.S. shut down the SEC has provision to act on VanEck Bitcoin ETF. However, ETF executives remain confident.
The ongoing government shutdown in the United States could likely have a major impact on future developments in the crypto market. Moreover, this is the longest shutdown by any government in the U.S. which can continue further.
The crypto community is eagerly waiting for the SEC’s decision on VanEck Bitcoin ETF. The SEC has a deadline of February 27 for the approval. However, on Jan. 16, the SEC said that it has put all of its administrative activities on hold until the shutdown concludes.
But despite the U.S. government shutdown, VanEck seems to be unfazed and confident for its ETF application. VanEck believes that it has already laid a robust foundation for the SEC to eventually approve its ETF. In a word with CCN, VanEck’s director of asset strategy, Gabor Gurbacs said:
“I have done everything I can to build the right market structure for Bitcoin and digital assets”.
However, American lawyer Jake Chervinsky made a series of tweets to explain how the shutdown can affect the VanEck Bitcoin ETF approval.
Chervinsky Consider Several Pragmatic Conditions
Jake Cervinsky is an associate at Washington D.C. for international law form Kobre & Kim. He is also well-known within the crypto community for his opinions on how the U.S. Securities laws affect the cryptocurrency market. On Friday, January 18, Chervinsky tweeted:
“The SEC’s final deadline to approve or deny the ETF is February 27. That’s 240 days after the ETF proposal was first published in the Federal Register. The SEC doesn’t have the power to extend the 240-day deadline. The statute absolutely prohibits any further delays. By law, that means if the SEC fails to make a decision by the February 27 deadline, the ETF will be automatically approved.”
However, Chervinsky says that even though the SEC remains out of business beyond February 27, it is “extremely unlikely” that the ETF will be automatically approved. With SEC putting its business on hold, staff members that handle ETF cases from the Division of Trading & Markets, have to stay home.
However, Chervinsky says that SEC has still got a handful of staff members to deal with such cases. These staff members are responsible to take care of “activities necessary for a short period in order to ensure an orderly shutdown of operations.”
7/ What activities are necessary to ensure an orderly shutdown?
The SEC gets to make that designation for itself, and I’m willing to bet it thinks preventing controversial financial products like bitcoin ETFs from being auto-approved due to blown deadlines is “necessary.”
— Jake Chervinsky (@jchervinsky) January 18, 2019
However, Chervinsky says that the SEC has already taken necessary action to avoid on missing its Feb 27 deadline. Citing an SEC document that mentions different action from the agency in case of shut down, Chervinsky says “if the shutdown continues to February 27, I think the ETF’s chance of approval is near zero”.
15/ If the SEC won’t approve new ETFs, then obviously it must deny them all. And why not? It should be very comfortable with a position like:
“The shutdown prevented us from completing our review, so we can’t be sure that the requisite standards for approval have been met.”
— Jake Chervinsky (@jchervinsky) January 18, 2019
He further twitted:
16/ Don’t get me wrong: the ETF could still be approved, especially if the SEC made its decision before the shutdown started.
All I’m saying is that the shutdown doesn’t improve the ETF’s chances of approval at all. In fact, the opposite is probably true.
— Jake Chervinsky (@jchervinsky) January 18, 2019
Delay In Bakkt Approval Due to the U.S. Shutdown
The much-awaited launch of ICE’s Bakkt platform is around the corner. However, the SEC doesn’t deal with the approval of launching a new trading platform and its the task of the U.S. Commodities and Futures Trading Commission (CFTC). Chervinsky says that the U.S. shutdown won’t have any impact on the CFTC.
He notes that unlike the SEC the CFTC doesn’t have any deadline on approval of Bakkt proposal. “Unlike the SEC, the CFTC has no statutory deadline for making a decision on Bakkt, so it can delay as long as it wants. Don’t expect anything on Bakkt until after the shutdown (maybe months after),” Chervinsky wrote.
