On June 20, an application for a Bitcoin ETF has been filed by CBOE Global Markets, which already offers Bitcoin futures. Notably, previous applications by other companies were rejected due to lack of proper regulation.
Recently, the Securities and Exchange Commission has clarified that Bitcoin and Ethereum are not considered as securities. Therefore, the cryptocurrency market is hopeful that this application will be accepted, leading to the flow of institutional funds in the nascent market.
On June 26, the SEC issued a notice of filing by the CBOE. Further, the SEC has requested comments/suggestions on the proposed rule change. The application reveals that the ETF will only trade SolidX Bitcoin Shares, with each share representing 25 Bitcoins. If the application is accepted, then ETF trading will begin in Q1 2019.
In March 2017, the SEC has rejected applications filed by VanEck SolidX Bitcoin Trust and Winklevoss Twins for a Bitcoin ETF. The application was rejected citing lack of regulation. While rejecting the application, SEC said, “Based on the record before it, the Commission believes that the significant markets for Bitcoin are unregulated. Therefore … the Commission does not find the proposed rule change to be consistent with the Exchange Act.”
There is still lack of clarity regarding the organization which oversees the cryptocurrency market, despite SEC announcing that Bitcoin and Ethereum are not securities. However, the SEC still maintains its position on ICOs and considers them as securities.
As SEC has decided not to regulate Bitcoin, there is a fair chance for the application to be accepted this time. The US is behind other countries such as Malta, which has already passed laws related to cryptocurrencies and blockchain technology. Flow Trader, Europe’s largest trader of ETFs, has announced that it will start trading in crypto ETNs, despite warning by Dutch regulator.
