In a move that dashed the hopes of cryptocurrency investors eagerly awaiting a regulated Bitcoin investment vehicle, the Chicago Board Options Exchange (Cboe) officially withdrew its proposal for the VanEck SolidX Bitcoin Trust exchange-traded fund on September 13, 2019. The withdrawal marked the second time in less than a year that the high-profile Bitcoin ETF application had been pulled from SEC consideration, sending a clear signal that regulators were not yet ready to greenlight a spot Bitcoin ETF.
TL;DR
- Cboe withdrew the VanEck SolidX Bitcoin Trust ETF proposal on September 13, 2019
- This was the second withdrawal in 2019, following a January pullback during the government shutdown
- The withdrawal was widely seen as a strategic move to avoid an outright SEC rejection
- Multiple other Bitcoin ETF proposals remained pending before the SEC
- Bitcoin was trading near $10,360 at the time, with no regulatory clarity in sight
Second Withdrawal in Nine Months
The September 13 withdrawal was the second time Cboe had pulled the VanEck SolidX proposal. The first withdrawal came in January 2019, ostensibly due to the US government shutdown that had left the SEC without sufficient staffing to review the application. At the time, the move was framed as a procedural necessity rather than a fundamental problem with the proposal itself.
The September withdrawal, however, carried a different tone. Industry commentators and legal analysts widely interpreted the decision as a preemptive move to avoid what appeared to be an inevitable rejection by the SEC. Rather than receive another formal denial — which would have added to the growing precedent against Bitcoin ETFs — the sponsors chose to withdraw and potentially regroup for a future attempt.
The Long Road to a Bitcoin ETF
The VanEck SolidX Bitcoin Trust had been one of the most closely watched ETF proposals in the cryptocurrency space. First filed in June 2018, the proposal envisioned a physically backed Bitcoin ETF that would allow institutional and retail investors to gain exposure to Bitcoin through traditional brokerage accounts, without the complexities of managing private keys or navigating cryptocurrency exchanges.
The proposal had undergone multiple rounds of public comment and SEC review. The Commission had extended its decision deadline several times, a pattern that the crypto community initially interpreted as a sign of genuine consideration. However, as months passed without approval, skepticism grew that the SEC remained unconvinced by arguments about market maturity, surveillance mechanisms, and investor protection.
Why the SEC Kept Saying No
The SEC’s reluctance to approve a Bitcoin ETF in 2019 stemmed from several persistent concerns. First, the Commission questioned whether the underlying Bitcoin markets were sufficiently resistant to manipulation. Unlike traditional equity markets, cryptocurrency trading was dispersed across dozens of unregulated exchanges, many operating in jurisdictions with limited oversight.
Second, the SEC had concerns about surveillance-sharing agreements. For an ETF to be approved, the listing exchange needed to demonstrate that it could detect and prevent fraudulent and manipulative acts in the underlying market. The fragmented nature of Bitcoin trading made this a significant challenge.
Third, the Commission pointed to the lack of regulated, sizeable derivatives markets tied to Bitcoin as an additional barrier. While Cboe and CME had launched Bitcoin futures in late 2017, the SEC did not consider these sufficient to support an ETF product at the time.
Impact on the Crypto Market
The withdrawal had an immediate psychological impact on the cryptocurrency market, though the price effect was relatively muted. Bitcoin was trading around $10,360 on September 13, down slightly on the day, reflecting a market that had largely priced in the setback. Ethereum sat at $181, with the broader crypto market capitalization hovering around $233 billion.
The muted reaction suggested that investors had grown accustomed to regulatory disappointment. Since the Winklevoss Bitcoin Trust was first rejected in 2017, a long line of ETF proposals had met the same fate. By September 2019, the market had learned to temper its expectations.
Other ETF Proposals Still Pending
Despite the VanEck SolidX withdrawal, other Bitcoin ETF proposals remained in the SEC pipeline. Bitwise Asset Management had filed its own proposal in January 2019, and several other applicants were in various stages of the review process. However, there was no indication from the Commission that it was prepared to change its stance. The SEC had consistently emphasized that the burden of proof lay with the applicants to demonstrate that the Bitcoin market met the standards required for an ETF listing.
Why This Matters
The September 2019 withdrawal of the VanEck SolidX Bitcoin ETF was a defining moment in the long and ultimately successful campaign to bring a spot Bitcoin ETF to market. While it would take more than four additional years — and a dramatic shift in the regulatory landscape — before the SEC finally approved spot Bitcoin ETFs in January 2024, the VanEck SolidX saga laid much of the groundwork. The extensive documentation, public comment periods, and legal arguments generated during this period shaped the eventual framework that made approval possible. For investors watching in September 2019, the withdrawal was a disappointment. In hindsight, it was a necessary step in a longer journey that would ultimately transform Bitcoin from a niche digital asset into a mainstream investment vehicle.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research before making any investment decisions.