Thread by @jchervinsky

0/ It kills me to tweet about SEC rulemaking procedures, but given the confusion on #crypto twitter today, it feels necessary.

TL;DR -- the SEC can, and probably will, delay its decision on the VanEck/SolidX commodity-backed #bitcoin ETF until ~February 21, 2019.

Thread.

1/ Some background. Unlike other types of funds (like mutual funds, closed-end funds, etc.), the federal securities laws did not originally provide for ETFs.

As a result, ETFs have to obtain an individualized exemptive order from the SEC before going to market.

2/ The timing of the ETF approval process follows a standard formula:

- the ETF files a "proposed rule change" with the SEC;
- the SEC posts notice of the filing in the Federal Register and solicits comments; and
- the SEC has 45 days from posting to approve or deny the ETF.

3/ Except the SEC doesn't have to decide within 45 days. It can extend the deadline up to three times:

- 45 more days if "a longer period is appropriate";
- 90 more days for the ETF to address grounds for disapproval; and
- 60 more days if again "a longer period is appropriate."

4/ This means the real deadline for the SEC to approve or deny an ETF is 240 days after it files notice in the Federal Register (45+45+90+60).

Yet, because of how the law works, the SEC can't just set a 240-day deadline from the jump. It has to do the extensions one at a time.

5/ Today, the SEC extended its deadline to approve or deny the Direxion futures-backed bitcoin ETF by 60 days; the new deadline is September 21.

This is the third & final extension allowed by law -- 15 U.S.C. § 78s(b)(2), in case you were wondering.

coindesk.com/sec-delays-dec…

6/ @Coindesk reported: "Notably, none of the ETF proposals being postponed are from VanEck and SolidX[.]"

But this isn't notable at all. The deadline to approve or deny the Direxion ETF was July 23. As explained, the SEC waits until the deadline before issuing another extension.

7/ The SEC wasn't making a decision about all of the pending bitcoin ETFs today; it was just handling the next step in the process for the Direxion ETF.

It had absolutely no reason (or justification) to address the VanEck/SolidX ETF. The fact it didn't do so is meaningless.

8/ The SEC's timing on the Direxion ETF is totally standard:

- Notice originally posted on January 24;
- First extension issued on March 1 (~45 days later);
- Second extension issued on April 23 (~45 days later); and
- Third extension issued on July 24 (~90 days later).

9/ So the standard timing for the VanEck/SolidX ETF would be:

- Notice was originally posted on June 26;
- First extension expected ~August 10 (45 days later);
- Second extension expected ~September 24 (45 days later); and
- Third extension expected ~December 23 (90 days later).

10/ Add 60 days to December 23 and you get a final deadline of February 21, 2019.

This could move forward or back by a few days (e.g., because December 23 is a Sunday and the SEC may be closed on December 24/25 too), but late February is the most likely target for a decision.

11/ I understand if hopium has you thinking "okay, but just because the SEC *can* delay doesn't mean it will."

Sure, that's fine in theory. But I can't imagine the SEC will approve the first ever bitcoin ETF without taking all the time allowed by law.

Sorry. Get ready to wait.

12/ Correction on the timeline: the final deadline should be March 4, 2019.

Notice was published on July 2, not June 26. Adjusting for weekend deadlines (which carry over to Mondays) you end up on March 4.

The amount of time lawyers spend calculating deadlines may surprise you.