Bitcoin Regulation

Bitcoin ETF Providers Rush to Get SEC’s Approval

Julio Gil-Pulgar · @gil_pulgar | Dec 17, 2017 | 20:00

---

The CME Group is ready to launch Bitcoin futures, and the cryptocurrency punctured the $20,000 USD resistance mark, both on December 17, 2017. The advent of Bitcoin futures and the spectacular growth in the cryptocurrency’s value are encouraging exchange-traded fund (ETF) providers to renew their efforts to obtain regulatory approval for vehicles that would track Bitcoin futures directly.

Financial Entities Are Eager to Offer Bitcoin ETFs

Potential ETF providers are now racing to obtain approval of the U.S. Securities and Exchange Commission (SEC) to issue ETFs in the U.S. Previously, the SEC rejected such petitions. For example, in March 2017, the SEC disapproved the Winklevoss twins’ requests for the Winklevoss Bitcoin Trust ETF (COIN).

However, the launch of the CBOE Bitcoin futures contracts on December 10, 2017, and today’s the rolling out of Bitcoin futures by the CME Group Inc. appear to confirm that the SEC requirements for a regulated framework have been satisfied. Ben Johnson, head of ETF research at Morningstar, said:

The futures cover most of the SEC’s concerns by creating a cleared, regulated financial instrument.

Now that the trading of Bitcoin futures is well underway, financial institutions want to track Bitcoin futures directly. As the Financial Times explains:

The launch of bitcoin derivatives by two big exchanges has encouraged potential ETF providers to push for approval of funds that would track bitcoin futures instead of the underlying cryptocurrency.

Bitcoin Futures Snowball Effect

The launch of the CBOE Bitcoin futures has created a snowball effect in the financial markets. In fact, two days before the launch of CBOE Bitcoin futures, three fund managers each requested regulatory approval for Bitcoin ETFs: Van Eck Associates Corp., First Trust Advisors LP, and REX Shares LLC.

TD Ameritrade is rushing to allow its clients to trade Bitcoin-based futures. In effect, TD Ameritrade starts trading Bitcoin futures as soon as the financial markets open on Monday, December 18, 2017.

On the same date, the CME Group Inc., the largest derivatives exchange in the world, begins trading Bitcoin futures. As a result, financial experts believe Bitcoin’s value and trading volumes will be boosted. As Reuters reports, Matt Osborne, chief investment officer of Altegris, explains:

Volumes are going to slowly increase as professional traders get comfortable with the price action and more importantly get comfortable with the volatility and the margin usage.

Bitcoin price performance will undoubtedly increase the snowball effect for ETFs and other Bitcoin-related vehicles. In fact, according to Investopedia, as of December 15, the SEC had already received fifteen petitions for Bitcoin ETFs.

What do you think about the potential impact of the SEC approving Bitcoin ETFs? Let us know in the comments below.

Images courtesy of Pixabay, CME Group