Jul. 24, 2018
To Whom It May Concern:
I am Jesse Hudson, Associate at Ziliak Law, and I am commenting because I believe the benefits of approving this ETF will substantially outweigh the costs.
The bitcoin market has valuable potential, but it has several key issues.
Issues with barriers to entry mean the overwhelming majority of investors cannot participate in the bitcoin market. Interested parties must sign up for new accounts, learn how to manage private and public keys, make transactions, and become literate in new terminology.
Issues with custody mean that many investors are only as secure as their own security practices. People risk losing their coins if they unwittingly reveal their private keys. According to some estimates, up to 20% of bitcoins are lost forever due to the loss of private keys. Unregulated exchanges with insecure custodial practices pose significant risks.
Issues with regulation mean unsophisticated market participants suffer exposure to significant risks. One might encounter spoofing, pump and dump schemes, token sale scams, identity theft, and malware.
Issues with borderless transactions mean that the U.S. is losing its grip on an increasingly multipolar financial landscape.
These issues can be addressed and resolved through your approval of the Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust.
Approval of the SolidX Bitcoin Shares will reduce barriers to entry by allowing investors to gain exposure to bitcoin through their existing brokers.
SolidX Bitcoin Shares will put custody of bitcoin in the hands of a trusted entity managed in part by the CBOE. The CBOE is a good candidate because (i) it is a self-regulatory organization uniquely positioned to navigate the decentralized space of Bitcoin, more so than previous applicants for a bitcoin ETF, and (ii) the CBOE’s success with BTC futures, its most successful product in terms of volume, expresses its mature understanding of bitcoin-related financial instruments.
SolidX Bitcoin Shares will insulate unsophisticated market participants from the risks in cryptocurrency markets through the buffer of the ETF, reducing the dangers such participants face.
SolidX Bitcoin Shares will serve the national interests of the United Stats in maintaining a leadership role in the global financial system.
Finally, the SEC has approved similar products in the past—products with greater volatility derived from more complex financial instruments, such as ETFs tied to the volatility index (VIX)—and should keep consistent with precedent.
Therefore, for the reasons stated above, I respectfully submit this comment in support of the Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust.