A bitcoin exchange traded fund (ETF) is looking more likely, given recent political events, according to Bloomberg’s Eric Balchunas in a recently televised “Bloomberg Technology” interview.
The Securities and Exchange Commission (SEC) earlier this year rejected the first proposed bitcoin ETF from the Winklevoss twins.
Balchunas points to recent events that make a bitcoin ETF more likely.
Why An ETF Is More Likely
The CBOE (Chicago Board Options Exchange) has announced it will list bitcoin futures and create a futures market, said Balchunas.
In early August, CNBC reported that pending review from the U.S. Commodities Futures Trading Commission (CFTC), the CBOE plans to offer cash-settled bitcoin futures in the fourth quarter of this year or early 2018.
There will also be bitcoin options, Balchunas said. “This will help bring more liquidity into the market,” he said. “That’s a big deal. I think it will help with the SEC.”
“The second thing is the SEC itself,” he said, referring to the Trump Administration’s influence on the SEC. The new front runner for the division of investment management is an attorney from the law firm that represented the Winklevoss twins in their bid for their bitcoin ETF. “I’m not saying they will make a decision based on that, but it can’t hurt,” Balchunas said.
“They’re a little more liberal than a year ago,” he said of the SEC.
‘Ready For Prime Time’
“When you approve an ETF for something, you’re essentially making it ready for prime time, because anybody with an e-trade account can now buy it,” Balchunas said. “It’s a lot easier than going out and signing up for a bitcoin account on one of the exchanges.”
“It’s also good for bitcoin because it’s going to open up a world of new investors,” he said, comparing it to what the GLD ETF did with gold, which is now a $40 billion ETF. The Winklevoss bitcoin ETF was modeled on GLD.
“It’s going to store bitcoin just like GLD stores gold and make it easier for investors to access it,” he said.
CFTC Authorizes Clearing House
The CFTC in July granted LedgerX, LLC registration as a digital currency derivatives clearing organization under the Commodity Exchange Act. LedgerX is authorized to provide clearing services for fully-collateralized digital currency swaps. LedgerX was also approved as a swap execution facility (SEF) on July 6, 2017, making it the first federally regulated SEF allowed to offer clearing services and a trading facility for options based on digital currency for the institutional market.
The SEC finding in July that DAO tokens are a security, and subject to federal securities laws was welcomed by cryptocurrency industry observers as an indication the agency is developing laws to apply to cryptocurrencies. The finding was part of an SEC report on its investigation into the DAO ICO.
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