Bitcoin ETF will not be automatically approved due to US government shutdown, says litigation attorney
Bitcoin [BTC]’s ETF approval has been a long-standing saga plagued with a lot of ups and downs. While proponents of the cryptocurrency have been trying hard to get it off the ground, the Securities and Exchanges Commission [SEC] of the United States has ensured that the decision remains postponed.
As it stands, the deadline for the decision is February 27, a date that some think will be reviewed because of the ongoing US government shutdown imposed by Donald Trump. Jake Chervinsky, a recognized lawyer and a government enforcement securities litigation attorney, gave his views on the VanEck/SolidX Bitcoin ETF by tweeting:
“The VanEck/SolidX bitcoin ETF won’t be automatically approved just because the US government is shut down. I’ve seen a lot of confusion & misinformation about how the shutdown affects the SEC and its process for handling ETF proposals. I’ll try to explain here.”
Chervinsky stated that the February 27 deadline is imposed by Federal statute, which means that the government shutdown does not affect it all. Being under the federal statute, the current law imposed on the Bitcoin ETF stands if the government functions or not.
He further stated that another power of the statute is prohibiting the SEC from changing the deadline in any capacity. This caveat theoretically implies that if left undecided, the Bitcoin ETF gets automatically approved.
The lawyer went on to say that such a situation was utopian and that the SEC still had a workforce toiling to carry out its stipulated processes. In his words:
“It’s true that the SEC has stopped nearly all of its work due to the shutdown & furloughed most of its employees. That includes the majority of staff members in the Division of Trading & Markets, which handles proposed rule changes.”
He carried on by saying:
“But the SEC still has a small number of staff members available to handle “excepted” functions, which mostly refers to urgent law enforcement matters, but also includes “activities necessary for a short period in order to ensure an orderly shutdown of operations.”
Jake Chervinsky opined that the remaining officials will ensure commodities such as the Bitcoin ETF will be blocked from being automatically approved, pointing to the January event where the SEC extended a deadline related to Nasdaq PHLX.
He stated that in case the Bitcoin ETF gets approved, then there are two things that could happen; either the SEC will let the auto-approval occur because it had already approved it earlier or the remaining workforce in the SEC will not be allowed to function.
Furthermore, Chervinsky thinks that if the government shutdown extends all the way till February 27, the chance of the Bitcoin ETF getting approved is negligible. This statement was based off the SEC’s rule on Page 18, which says:
“The SEC will discontinue “review and approval of applications for registration . . . with respect to new financial products.”
He closed his argument by stating that due to the shutdown, the odds of the Bitcoin ETF getting rejected was much higher than that of it getting approved. Chervinsky also gave his comment on Intercontinental Exchange’s Bakkt by saying:
“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).”