SEC Delays Decision on Barry Silbert's BIT after Receiving Scathing Comments

March has been a busy month for the U.S. Securities and Exchange Commission (SEC). Following its March 10 decision on Coin ETF, the Commission will soon have to make a decision on Solidx Bitcoin Trust, which is due on March 30. In addition, there is another deadline this month that most people have overlooked. It is the first deadline for Barry Silbert’s Bitcoin Investment Trust (BIT), which is due on March 26. However, the Commission has announced this week that it is delaying the decision on the BIT for 45 days.

Also read: SEC Rejects Rule Change for Bitcoin ETF

Decision Postponed to May 10 – for Now

The NYSE Arca exchange filed a proposed rule change to list and trade shares of the BIT on January 25, which would trade under the symbol GBTC. Without an extension, the Commission would have to make a decision on the BIT 45 days after the proposed rule change was published in the Federal Register, which was on February 9.

The Commission has now chosen to extend its decision period for 45 more days. In its notice on Wednesday, the SEC wrote:

The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,6 designates May 10, 2017, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change.

While May 10 has been chosen, it is not the very last day which the SEC has to make its decision. The Commission can still extend the deadline further, up to 240 days from the date of publication in the Federal Register, as it did so with the other two bitcoin trusts.

The SEC can also choose to deliver its decision any time before the deadline. In addition, NYSE Arca can choose to withdraw its proposed rule change filing. So far, there has been no indication of either.

3 Negative Comment Letters Received

The SEC also revealed that three comment letters were received on the BIT. Unlike for Coin and Solidx which received some encouraging comments, none of the three letters for the BIT urge the SEC to consider approving the BIT’s proposed rule change.

The first comment letter, dated February 5, is from Joseph Stephen White who identified himself as “a former “bagholder” of bitcoin and other currencies such as freicoin and litecoin”. His letter outlines ponzi schemes, illegal drug markets, and scams such as Butterfly Labs. He also provided a link to Reddit community ‘Buttcoin’ before concluding that: “bitcoin is not ready yet for wide scale use as there are too many people who can be controlled by the network by a few people who the government does not have any say over”.

A few days later, the second comment letter was posted on the SEC website, supposedly from Ethereum co-founder Jeffrey Wilcke. However, Wilcke has said on Reddit that the letter was not from him. “There are major ethical concerns and conflicts of interest around Digital Currency Group (DCG), the parent company of the Bitcoin Investment Trust, and their media subsidiary Coindesk”, the letter reads. It also points out that DCG subsidiary Grayscale operates “Ethereum Classic Investment Trust“, a barely recognized alt-coin that’s illegally infringing on a trademark of the Ethereum Foundation”. Citing how Coindesk has written about this altcoin “more than 88 times”, the letter warns the SEC of DCG’s ability to “”pump-and-dump” worthless assets” to unsophisticated investors.

The third comment letter came last week, from Mark T. Williams, a.k.a Professor Bitcorn. Getting straight to the point, Williams wrote that the BIT should not receive SEC approval “as it is similar to” Coin that was denied on March 10. He also agreed with Wilcke, stating that DCG “is fraught with inherent conflicts of interest”.

While all comments have been negative so far, the SEC has already said that its decisions are not based on comments. When rejecting the Coin ETF, the Commission disregarded some comments, stating that:

Ultimately, however, comments on these topics do not bear on the basis for the Commission’s decision to disapprove the proposal.

The Bitcoin community does not think that the SEC will approve any Bitcoin ETFs anytime soon, given its reasons for rejecting Coin.

Do you think Barry Silbert’s Bitcoin Investment Trust has a chance of being approved by the SEC? Let us know in the comments section below.

Images courtesy of Shutterstock, NYSE, Etherum Foundation, and Grayscale

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