On September 8, 2021, the SEC issued a further extension of the review period for the VanEck Bitcoin Trust exchange-traded fund (ETF) application, delaying its decision until November 14, 2021. The VanEck application has been closely monitored as it is the first such request for approval at the front of approximately a dozen similar applications for cryptocurrency ETFs filed with the regulator. ETFs enable investors to include digital assets in traditional brokerage accounts without actually holding the underlying assets.

The SEC has twice before delayed the VanEck decision, in June and in April of 2021 (see Legal Update, SEC to Review Decision Denying Bitcoin ETF Listing). The latest delay gives the agency an additional 60 days from September 15, 2021 to approve or disapprove the application. Under its rules, the SEC can only extend its consideration period for prospective ETFs three times. The VanEck application is the furthest along in the application process. Prior applications by VanEck and several other issuers date back to June 2018 but have been rejected or withdrawn for various reasons. Others in the logjam of ETF applications include Fidelity, WisdomTree, First Trust Skybridge, Galaxy Digital, Ark, and Valkyrie.

The delay increases concern over the future course of crypto regulation under Chairman Gary Gensler. The SEC's Office of Information and Regulatory Affairs formally released the agency's regulatory agenda on June 11, 2021, which omitted any mention of digital assets. SEC commissioners Elad Roisman and Hester Peirce released a statement which took issue with the omission and called for rules to provide clarity for digital assets. Gensler stated August he anticipated the filings of more crypto ETFs and suggested that ETFs limited to CME-traded bitcoin futures could gain approval.

Prior ETF applications have been rejected primarily over concerns related to price transparency, potential manipulation and liquidity of the underlying spot market prices for the digital asset. A product linked to regulated futures markets would be similar to other ETFs based on commodities like gold or oil, or on a large universe of fixed income products such as US treasuries.