Now that the Bitcoin futures contracts are trading live in the market, this has certainly opened up doors for the financial institutions to pitch for Bitcoin Exchange Traded Funds (ETFs).
Recently, we have seen how New York Stock Exchange (NYSE) filed a proposal with the SEC for two Bitcoin ETFs – the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF. Both these funds will be tracking the momentum in Bitcoin futures benchmarks provided by CBOE and CME being not involved in investing in Bitcoin or holding the cryptocurrency.
After NYSE, it is the Chicago Boards Options Exchange (CBOE), who last week together with the Securities and Exchange Commission (SEC) has filed for six different Bitcoin Exchange Traded Funds. Being the first one to launch the Bitcoin Futures Contract in the market, CBOE is betting further on the new emerging asset class.
As per the public records, CBOE has proposed few rule changes to the SEC, which will allow the exchange to file for 6 Bitcoin ETFs. All these rules’ changes were submitted to the SEC between Dec. 15-19. The list of 6 ETFs as filed by the CBOE include:
- First Trust Bitcoin Strategy ETF;
- First Trust Inverse Bitcoin Strategy ETF;
- GraniteShares Bitcoin ETF;
- GraniteSharesShort Bitcoin ETF;
- REX Bitcoin Strategy ETF;
- REX Short Bitcoin Strategy ETF.
While speaking to CNBC, a CBOE spokesperson said:
“Given the success of the launch of our bitcoin futures, several partners are very interested in moving forward with the development of an exchange-traded product.”
Just like NYSE, CBOE ETFs will allow traders to bet on the futures contract benchmarks.
The First Trust filing reads that the fund “intends to invest primarily in Bitcoin Futures Contracts, [though] it may also invest in other Listed Bitcoin Derivatives, OTC Bitcoin Derivatives, U.S. exchange-listed ETPs, and Non-U.S. Component Stocks (collectively, ‘Bitcoin Instruments’).”
However, pushing ETF contract to get approved by the SEC is a tough task to achieve given the fact that SEC has been quite reluctant to accept ETF proposals in the past. The famous Winklevoss brothers – Cameron and Tyler, who made a billion-dollar fortune by investing into Bitcoins, have way back submitted their proposals to the SEC and have been receiving continuous and repeated opposition.
However, one of the major reasons for rejection in the past is that Bitcoin futures contracts were not launched then. Now, with the futures contracts being already live, there is a high possibility that SEC will review its position on this matter.
Quite for a long time CBOE has been open about its intention to bring Bitcoin into the mainstream. While speaking to Bloomberg back at the start of November 2017, CBOE President Chris Concannon said that his firm looks optimistic about ETFs and also said that they are “coming to the market” sooner.
This week, there has been a high volatility in the market as Bitcoin prices slipped by more than 44%, from its all-time high of more than $20,000 to below $12,000. The price of Bitcoin has, although, recovered a bit in the past 24 hours and is currently trading at $14532.70, according to CoinMarketCap.
The arrival of ETF and other Bitcoin-related products is expected to bring more legitimacy and reduce the extreme volatility in Bitcoin price.