SEC Publishes the Memorandum From the Meeting With VanEck, SolidX, and CBOE

The US SEC published a memorandum from the meeting that Commissioner Roisman and his counsels held with representatives of VanEck, SolidX, and CBOE, the applicants of the most anticipated Bitcoin ETF.


The US SEC published a memorandum from the meeting that Commissioner Roisman and his counsels held with representatives of VanEck, SolidX, and CBOE, the applicants of the most anticipated Bitcoin ETF.

The meeting concerning VanEck-SolidX’s pending ETF rule change proposal took place on October 9th and was attended by SolidX’s Dan Gallancy and Dimitri Nemirovsky, Laura Morrison and Kyle Murray from CBOE, and Adam Phillips on behalf of VanEck.

The memorandum contains a comprehensive presentation for Commissioner Elad L. Reisman, through which the applicants point out to the factors that can influence the commission’s final decision regarding their Bitcoin (BTC) ETF application.

The market has changed

VanEck-SolidX representatives took the time to emphasize the all-encompassing changes on the market that happened since VanEck’s last plea was rejected in March 2017.

The opening argument in the presentation states that multiple CFTC regulated derivatives markets have been established for Bitcoin since 2017, naming CME’s and Cboe’s Bitcoin Futures Contracts.

VanEck-SolidX officials, as a comparative advantage of their platform, explim that their Bitcoin trust will use OTC’s Bitcoin trading desk pricing. Those desks follow strict AML, KYC and BSA regulations, and are under the jurisdiction of the US CFTC.

Rule change proposal is consistent with the Securities Exchange Act

In their detailed presentation, partners extracted section 6(b)(5) of the Securities Exchange Act, based on which the SEC declined to approve VanEck’s last proposal with an argument that their service “doesn’t prevent fraudulent and manipulative acts and practices.”

According to the parties, Cboe rules are designed to “prevent fraudulent and manipulative acts, and foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities,” and are, therefore, consistent with the Act.

They are also perfecting the mechanism of a free and open market by removing impediments, while, at the same time, preventing market manipulation through the initial and continued listing standards, and obligations.

As a thing of the highest public interest and something the market has been in shortage of, VanEck and SolidX, mention their $125 million of insurance capacity.

The unclear requirements

In their last refusal letter to VanEck, the Commission noted that Bitcoin is still in the early stages of development. They have also acknowledged that a regulated Bitcoin-related market of significant size may eventually develop, and if so, the Commission will consider whether a bitcoin ETF would then be consistent with the aforementioned Exchange Act.

In their answer, VanEck and SolidX refer to the commission’s definition of “significant” as a moving target, a hypothetical value that can be constantly changed.

“The Staff have never provided guidance as to what “significant” means, enabling them to move the goal post indefinitely,” parties argued.

In comparison with the rest of the market

In the closing statements of the presentation, VanEck, SolidX, and CBOE reflect on the double standards set by the SEC, comparing their ETF venture with initial coin offerings.

According to the publication, the SEC’s high level of scrutiny towards their proposal can’t be compared to the lenient approach the commission is taking with ICOs.

The applicants point to the security shortcomings of utility token-based crowdfundings compared to their regulatory compliant product, particularly emphasizing the number of ICOs and altcoins in the market.

SEC has already rejected nine applications for Bitcoin ETFs from three different applicants, but VanEck and SolidX’s is considered to be the most serious contender for the pioneering spot in the market.

Since VanEck-SolidX ETF application final decision has already been postponed, this initiative can be best described as an attempt to reach some form resolution.

Hopefully, we will witness something with more essence from the Commission during the upcoming months.

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