Cboe calls on SEC to allow Bitcoin ETFs

on Mar 27, 2018

The operator of the Chicago Board Options Exchange, Cboe Global Markets, has sent a letter to the US Securities and Exchange Commission (SEC), suggesting that the market could support the creation of exchange-traded funds (ETFs), industry website Coindesk has reported.

The letter, written by Cboe president Chris Concannon, was a response to a statement, released by the SEC in January, in which the regulator expressed a number of concerns with regards to approving ETFs, including market fragmentation and investor protection shortfalls.

In his response, Concannon argued that the Bitcoin commodity markets were moving towards being able to support exchange-traded products (ETPs). He used data collected by Cboe in the months after its launch of Bitcoin futures to support his argument.

"While the the current bitcoin futures trading volumes on Cboe Futures Exchange and CME may not currently be sufficient to support ETPs seeking 100% long or short exposure to bitcoin, Cboe expects these volumes to continue to grow and in the near future reach levels comparable to those of other commodity futures products at the time that they were included in ETPs," Concannon said, as quoted by Coindesk.

While the executive admits that Cboe shares “many of the concerns” raised by the regulator, he believes that the majority of these concerns can be addressed within existing frameworks for commodity related funds. In addition, Concannon notes that the markets for government issued currencies and gold are “probably more fragmented” than digital currency markets, adding that “there are a lot of venues to access currency markets”.

In December, last year Cboe became the first major US exchange to launch Bitcoin futures contracts, after receiving approval from the US Commodity Futures Trading Commission. The company’s Chicago-based rival, CME Group followed suit by launching its own Bitcoin futures product a couple of weeks later.