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SEC Adopts Amendments to Expedite ETF Review Processes

SEC

The United States Securities and Exchange Commission (SEC) has announced that it would be refining its process of ruling on companies with applications for investment opportunities. In an announcement published earlier this week, the financial regulator explained that it had amended its rules to expedite its review processes.

Shorter, More Accurate Reviews

Under the Investment Company Act, the SEC has oversight over companies that bring new investment products to the market. The Act especially enforces strict guidelines on companies looking to launch publicly-traded investment product offerings. These include closed-end mutual funds, open-end mutual funds, and unit investment trusts.

As part of the process, the SEC will have between 12 and 16 weeks to review the product and give a verdict on approval or denial. However, as the new announcement explains, the agency is now looking to adopt a “more efficient” application process, which, amongst other things, will show greater accountability.

The agency explained that such expeditions could provide a trove of benefits for both funds and their shareholders. Jay Clayton, the Chairman of the SEC, highlighted the importance of the current application process to the agency’s regulatory structure. However, he also explained that there was a need for significant change to keep up with the times. In part, he said:

“The changes approved today will modernize and streamline this process, resulting in improved transparency, reduced costs, and a more efficient use of our staff’s resources.” The agency added that it would implement the changes 270 days after publication in the Federal Register.

Hope for Bitcoin ETFs?

As the new amendments show, funds —ETFs that require an SEC-granted exception to operate can get an expedited review. However, the fund will still need to get a turd application within three years. In such a case, the agency will notify the applicant within 45 days of the filing date.

While a more streamlined review process is positive news, there has also been some discussion concerning what this could mean for the future of Bitcoin-based investment products — notably, Bitcoin exchange-traded funds (ETFs).

As with several investment products of the same class, the SEC holds jurisdiction over Bitcoin ETFs. Many see these tools as a great way to foster interest in Bitcoin and attract more institutional investors, and while several companies have applied for licenses to provide it, none has scaled through the SEC’s brick wall.

In fairness, most of the rejections have been due to a myriad of reasons. When the SEC rejected the application of asset manager Wilshire Phoenix, it did so on market manipulation and investor concerns. However, some of these applications also failed because the applicants got fed up with the SEC’s delays. The Chicago Board Options Exchange filed the VanEck/SolidX ETF application and pulled it in January 2019 following several delays. The exchange filed several days later, but it pulled its application once again last September.

Such delays only serve to demoralize applicants and push them into other investments easily. If the SEC can quicken the review process and deliver verdicts easier, companies should feel encouraged to give the Bitcoin ETF another go.

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