CBOE Aims to Be the First to List Bitcoin ETF

The race to list the first bitcoin exchange-traded fund has intensified in recent months even as regulators balk at the notion of crypto-backed funds. When the SEC does come around, CBOE Global Markets Inc. is planning to be the first-mover.

CBOE Takes Aim at Bitcoin ETF

The Chicago-based exchange is confident that the U.S. Securities and Exchange Commission (SEC) will eventually approve a rule change that would pave the way for the first bitcoin ETF. According to Chris Concannon, CBOE’s president and COO, the approval process may not be far off.

“As we chip away at their issues to make them less concerned, at some point they’ll be comfortable with an ETF,” Concannon told Bloomberg on Tuesday.

Concannon took a balanced approach in explaining both the opportunities and challenges of listing a bitcoin ETF. In his view, it’ll take just one domino to fall before we are looking at multiple crypto-backed funds, and in relatively short order.

“Having the underlying futures come to market first, prior to an ETF, I think you have a healthier, more mature market.The problem with a futures-based ETF is, what is the right level of liquidity? It’s never been tested before.

“There’s a huge first-mover advantage in the ETF world,” he added. Once the assets “come pouring in, it tends to continue. We’ve seen that in other ETFs.”

The Best Shot

Concannon’s confidence likely stems from the fact that his exchange plans to list the VanEck SolidX Bitcoin ETF, which the market regards as having the best shot of being approved by regulators. VanEck penned a lengthy letter to the agency in July reiterating industry-wide support for the proposed fund, which claims to overcome many of the liquidity and market manipulation concerns currently held by regulators.

Unlike other bitcoin ETF applications, the VanEck/SolidX proposal plans to back the fund with physical bitcoin rather than track the digital currency through the futures market.

As Hacked reported last week, the SEC has postponed its ruling on the VanEck proposal until the end of September to investigate the matter more closely. This triggered a massive correction in the price of bitcoin and the broader market.

Only a Matter of Time

Although the chances of regulators approving a bitcoin ETF this year have always been low, assent could be granted as early as February of next year, according to Hany Rashwan, the chief executive officer of crypto startup Amun Technologies.

“The SEC is likely to delay until February of 2019 and the chances of a Bitcoin ETF approval in 2018 have always been low,” Rashwan told Bloomberg last week.

In conducting our research, we also came across this interesting tidbit by the crypto journal outlet, which claims to have spoken with a former SEC employee in the know about the agency’s bitcoin deliberations. Here’s what the source had to say:

“The four people I still talk to on the daily at the SEC are basically telling me this ‘it is going to get approved but we are going to make the markets understand that we dug really, really deep i.e. investor protection/transparency’. And that makes sense. The vast majority of the public still has no idea what ‘digital assets’ are or what it means. So when you do an approval like this, and the successive approvals that will follow in this asset class – think of the 3-5 year return number that will be associated with this market? And maybe that is the key to the VanEck SolidX approval? It is set up as an accredited investor vehicle. That singular element is probably what gives so many of us a firm belief in its approval. And it is a stroke of genius by the VanEck SolidX group.”

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi