United States regulator, the Securities Exchange and Commission (SEC), has received an application for a Bitcoin exchange-traded fund (ETF) license from Chicago Board Options Exchange (CBOE) Global Markets. While other applications have been turned down by the watchdog, a Bitcoin ETF looks like it will have a better chance of success.
Although the US regulator has historically taken a hard stance on crypto-backed funds, the application from the exchange looks like it may have a better chance of success. This is because the SEC recently commented that it does not classify Bitcoin and Ethereum as securities. As a result, this may open the door for cryptocurrencies to become tradeable as ETFs.
An ETF is a fund which trades like a stock but owns the underlying asset of the stock. Although shareholders do not own the asset directly, they are entitled to a proportion of the profits.
According to the documents published on the SEC website on June 26 this year, CBOE Global Markets wants to list and trade bitcoin shares backed by asset manager VanEck and blockchain company SolidX.
Each share will be worth 25 Bitcoin, and the proposal will only trade with SolidX Bitcoin Shares. This is a Bitcoin ETF that has been proposed by VanEck SolidX Bitcoin Trust. However, even if the exchange does get approval, investors won’t be able to see the trading options until the first quarter of 2019.
Redefining cryptocurrencies
The application comes amid a time of speculation that financial funds are moving to directly offer cryptocurrency investment vehicles beyond the future contracts that are currently available for investment. As a result, widespread opinion now believes that cryptocurrencies are on the brink of a large investment wave from institutional investors.
VanEck SolidX Bitcoin Trust has previously put in two applications to have its Bitcoin shares listed as ETFs. However, the applications were both rejected in March 2017, due to the crypto market being entirely unregulated.
At the time, the SEC released the following statement: “based on the record before it, the Commission believes that the significant markets for Bitcoin are unregulated. Therefore [sic] the Commission does not find the proposed rule change to be consistent with the Exchange Act.”
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