SEC Reviews SolidX Bitcoin ETF Proposal

On March 24, 2017, the Securities and Exchange Commission continued its review of the SolidX Bitcoin Trust ETF proposal, which remained under consideration despite the recent rejection of the Winklevoss Bitcoin ETF. The SolidX proposal differed from the Winklevoss ETF in several technical aspects, including its intended minimum investment size and custody arrangements, leading some observers to hope it might address the SEC's concerns more effectively.

However, the fundamental challenges around Bitcoin market structure, surveillance, and regulation that had doomed the Winklevoss application also applied to SolidX and other Bitcoin ETF proposals.

The ongoing review of SolidX and other ETF proposals kept hope alive in the Bitcoin community that an ETF approval might eventually be achieved even after the Winklevoss rejection. The SEC's concerns were primarily about the unregulated nature of Bitcoin spot markets rather than about Bitcoin itself, suggesting that improvements in market infrastructure, surveillance sharing agreements, and regulatory oversight could eventually satisfy regulators.

Various Bitcoin ETF applicants and exchanges were working to address these concerns, including developing better custody solutions, creating surveillance sharing agreements between exchanges, and building more robust compliance frameworks. The SEC's continued willingness to review multiple Bitcoin ETF proposals, rather than categorically ruling out cryptocurrency ETFs, suggested that approval was a matter of when rather than if, though the timeline remained uncertain.The industry needed to mature its infrastructure and regulatory compliance before the SEC would feel comfortable exposing traditional investors to Bitcoin through an ETF vehicle.