There has been an overwhelmingly positive public response for the SEC to allow the Chicago Board Options Exchange (CBOE) to trade Bitcoin ETFs.
The official website for the Securities and Exchange Commission (SEC) has received well over 150 comments from members of the public at press time; almost all are in favor of CBOE’s proposal to list and trade Bitcoin ETFs on its exchange.
The SEC opened a request for comments on the 26th of June and there are currently nearly 20x more comments for CBOE’s proposed bitcoin ETF than in a similar proposal that had been filed back in April; comments have even spilled out into another ETF proposal, completely unrelated to cryptocurrency. Due to the volume of comments, the SEC has had to postpone a decision on another BTC-related filing until September.
Exchange Traded Funds (ETFs) are a collection or ‘basket’ of assets that can then be bought and sold on stock exchanges. They can only be sold to accredited investors, but unlike conventional stocks represent a high volume of the asset denoted.
According to CBOE’s proposal, filed nearly three weeks ago, every Bitcoin ETF would be made up of five shares each comprised of 25 BTC. This would give an ETF a trading value of approximately $850,000 at current prices.
Although this would exclude almost all retail investors from participating, those who commented on the SEC website highlighted that Bitcoin ETFs would make cryptocurrency trading more accessible and secure for investors.
Some also said that because ETFs are regulated assets they would enable institutional investors to get involved; others pointed out that ETF investors would be insured from financial failure by the Securities Investor Protection Corporation (SIPC), a federal protection fund.
‘Opening the flood gates’: Bitcoin ETFs.
Cryptocurrency is surprisingly open to institutional-level involvement, despite its roots. Sources have told Crypto Briefing that this is partly because it gives the industry vital recognition and legitimacy, but also because it could make substantial sums of money available for projects, with one investor likening this to an “opening of the floodgates”.
BlackRock, the largest asset manager in the world, has formed a working group to investigate whether it should take an active step into cryptocurrency and blockchain. In early July, Coinbase launched ‘Coinbase Custody’, a fully regulated custody solution for institutional investors to safely store cryptocurrency. The exchange, which has been given the regulatory go-ahead to trade security tokens, also opened an index fund for accredited investors in mid-June.
The CFA Institute, which offers programs to train financial professionals, has added cryptocurrency and blockchain to its curriculum. The managing director for the CFA curriculum, Stephen Horan, told Bloomberg that “this is not a passing fad”, as the sector has proven to be far more durable than previously thought.
CBOE made waves when it became the first exchange to open trading for Bitcoin futures back in December. Although initial predictions suggested this would significantly affect the market, the impact of BTC futures has so far been negligible compared to conventional trades.
Considering their size, CBOE’s proposed bitcoin ETFs may ultimately give institutional investors a much larger sway in the market than futures. As cryptocurrency trading slowly incorporates itself into mainstream finance, retail investors may begin to lose their footing.
The author is invested in BTC, which is mentioned in this article.