Could The US Government Shutdown lead to a Bitcoin ETF approval?
TL: DR
- The US Government shutdown has led to new speculations that the SEC may ‘auto-approve’ the upcoming VanEck ETF decision due to being too understaffed to conduct a final review before the February 27th deadline
- Legal expert Jake Chervinsky provides a counter-argument for this narrative, explaining how the SEC is still able to attend critical functions despite the shutdown
In 2018 the crypto space went through an emotional rollercoaster regarding the promise of a Bitcoin ETF finally being approved. Sadly, all ETF applications were either rejected or postponed, triggering multiple crashes in the price of Bitcoin that only added to the losses felt during this bear market.
However, it appears that there may be some hope for a Bitcoin ETF approval in 2019, even if it doesn’t come in the way we expect.
The next upcoming decision is due on February 27th for the VanEck Solidx Bitcoin ETF. This ETF was previously postponed in last December, and so a decision must be made by this deadline.
The rules state that each decision carries a 240-day deadline. The VanEck proposal was initially made public on June 6th, 2018, which means February 27th is already a few weeks past the 240-day mark and so there it will be tough for the SEC to delay the decision any further.
And Then Comes The Longest US Government Shutdown
The X factor that makes the outcome of this ETF decision more fascinating is the fact that the US is currently in the middle of a Government shutdown. Jake Chervinsky, a Government enforcement defense, and securities lawyer shared his thoughts on how this current situation affects the ETF decision.
He dispels the myth that the VanEck ETF will be automatically approved just because the government is shut down.
This assumption comes from the fact that the 240 days deadline is imposed by Federal Statute, which means that the shutdown doesn’t affect it at all and that the law will continue to apply whether the government is funded or not.
However, Jake points out the fact that despite the SEC halting most of its work and staff members, there is still a small number of employees who are working to handle “urgent law enforcement matters” and “activities necessary for a short period to ensure an orderly shutdown of operations.”
Jake believes that the SEC considers the “prevention of controversial financial products like bitcoin ETF’s from being auto-approved” as both a necessary and urgent law enforcement matter.
He points out that the SEC has already taken some actions to extend deadlines for other significant decisions (such as a rule change for Nasdaq PHLX) during the government shutdown.
Based on Jakes analysis of the situation, we can surmise that the few remaining staff members of the SEC will carry on with business as usual and make a decision when the February 27th deadline arrives.
According to Jake, if the SEC does decide to go with an auto-approval, this would only take place in case the ETF was already set for approval before the shutdown occurs.
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