CBOE calls on SEC to allow bitcoin ETFs
The SEC remains concerned about the possible lack of sufficient liquidity to meet redemption requirements.
Following numerous proposals, the largest US options exchange, CBOE, has urged the United States Securities and Exchange Commission (SEC) to permit the advancement of cryptocurrency exchange-traded funds (ETFs).
In a letter addressed to SEC director of investment management Dalia Blass, CBOE president Chris Concannon praised the regulator’s methods for identifying potential concerns associated with cryptocurrency holdings in registered funds. However, Concannon requested that the SEC allow CBOE to offer potential investors bitcoin ETFs in the same way that commodity-related products are allowed.
“While CBOE shares many of the concerns raised in the Staff Letter, we believe that the vast majority of these concerns can be addressed within the existing framework for commodity-related funds related to valuation, liquidity, custody, arbitrage, and manipulation,” Concannon said in the letter.
CBOE’s request was in response to an SEC letter published in January, which highlighted the regulator’s apprehensions regarding the possible lack of sufficiently liquid assets to meet daily redemption requirements.
“As the volumes continue to grow, especially on regulated US markets, the overall spot Bitcoin market looks more and more like a traditional commodity market and CBOE continues to believe that the spot market is sufficiently liquid to support a Bitcoin exchange-traded products (ETPs),” Concannon added.
CBOE says investors can gain exposure to more mature cryptocurrencies through ETPs without the additional complications and risks of the spot market, ensuring capital formation and financial innovation.
“…the Commission should not stand in the way of such ETPs coming to market,” Concannon concluded.
CBOE launched bitcoin futures trading in early December, offering investors their first opportunity to bet on whether the cryptocurrency’s value will rise or fall over time. CBOE trading saw initial bitcoin futures contracts, expiring in January, start at $15,000 before increasing to more than $18,000. The contracts are based on the value of bitcoin as quoted on the Gemini exchange.
The first big move toward mainstream Wall Street investments into Ethereum has been made by the only swap exchange so far regulated by the Commodity Futures Trading Commission – trueEX marketplace.
Earlier this month, the SEC issued a statement on potentially unlawful online platforms trading digital assets, published by the regulator’s Divisions of Enforcement and Trading and Markets. The notice suggests that if a platform offers trading of digital assets that are securities and operates as an exchange, then the platform must register with the SEC as a national securities exchange or be exempt from registration.
Ripple chief executive Brad Garlinghouse said that exchanges only have three options available to them.
Additionally, during a recent television interview, SEC chairman Jay Clayton reinforced the regulator’s message to potential digital currency traders on the risks involved with initial coin offerings (ICOs).
You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.
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