Bitcoin Trading Volume About to Pick Up
In a recent interview with Bloomberg Technology, Eric Balchunas suggested that the listing of a Bitcoin exchange-traded fund (ETF) is more likely now than ever before, with recent political events playing a significant role in this shift. Balchunas points out that the Securities and Exchange Commission (SEC) previously denied the Winklevoss twins' request to list a Bitcoin ETF earlier this year. However, the situation has changed since then.
The US Commodities and Futures Trading Commission (CFTC) has been conducting a review to determine whether the Chicago Board Options Exchange (CBOE) will be allowed to list Bitcoin futures and create a futures market in the US. This review is expected to be completed soon, with potential launch of cash-settled Bitcoin futures in the fourth quarter of 2018. Balchunas also suggests that Bitcoin options are being considered, as they would bring additional liquidity to the market. This liquidity is crucial for the SEC to consider approving the listing of any Bitcoin ETF.
Interestingly, Balchunas notes that the leader of the SEC's investment management division, who may have a say in the approval of Bitcoin ETFs, is a former lawyer who previously attempted to help the Winklevoss twins with their ETF listing. He believes that this individual's background could lead to more economically liberal policies in the coming years.
From a market perspective, Balchunas states that the approval of a Bitcoin ETF would lead to a significant increase in adoption, especially among institutional investors. With an ETF, these investors could easily incorporate Bitcoin into their portfolios. Additionally, the accessibility of Bitcoin for retail investors would be enhanced, as they would be able to buy it through their existing online trading accounts. This could have a substantial impact on the Bitcoin market, as witnessed with the listing of the GLD gold ETF, which significantly increased liquidity in the gold market. The Winklevoss ETF was actually modeled after the GLD example.
Furthermore, Balchunas mentions that the CFTC has granted authorization to LedgerX as a registered clearinghouse, allowing it to provide clearing services for fully-collateralized digital currency swap instruments. LedgerX has also become a Swap Execution Facility, making it the first fully regulated clearing house that offers clearing services and trading facilities for options based on digital currencies. This authorization is a result of the SEC's determination that DAO tokens are classified as securities and subject to securities laws. Overall, this indicates that the SEC is exploring how existing regulations can be applied to cryptocurrencies.
In a recent interview with Bloomberg Technology, Eric Balchunas suggested that the listing of a Bitcoin exchange-traded fund (ETF) is more likely now than ever before, with recent political events playing a significant role in this shift. Balchunas points out that the Securities and Exchange Commission (SEC) previously denied the Winklevoss twins' request to list a Bitcoin ETF earlier this year. However, the situation has changed since then.
The US Commodities and Futures Trading Commission (CFTC) has been conducting a review to determine whether the Chicago Board Options Exchange (CBOE) will be allowed to list Bitcoin futures and create a futures market in the US. This review is expected to be completed soon, with potential launch of cash-settled Bitcoin futures in the fourth quarter of 2018. Balchunas also suggests that Bitcoin options are being considered, as they would bring additional liquidity to the market. This liquidity is crucial for the SEC to consider approving the listing of any Bitcoin ETF.
Interestingly, Balchunas notes that the leader of the SEC's investment management division, who may have a say in the approval of Bitcoin ETFs, is a former lawyer who previously attempted to help the Winklevoss twins with their ETF listing. He believes that this individual's background could lead to more economically liberal policies in the coming years.
From a market perspective, Balchunas states that the approval of a Bitcoin ETF would lead to a significant increase in adoption, especially among institutional investors. With an ETF, these investors could easily incorporate Bitcoin into their portfolios. Additionally, the accessibility of Bitcoin for retail investors would be enhanced, as they would be able to buy it through their existing online trading accounts. This could have a substantial impact on the Bitcoin market, as witnessed with the listing of the GLD gold ETF, which significantly increased liquidity in the gold market. The Winklevoss ETF was actually modeled after the GLD example.
Furthermore, Balchunas mentions that the CFTC has granted authorization to LedgerX as a registered clearinghouse, allowing it to provide clearing services for fully-collateralized digital currency swap instruments. LedgerX has also become a Swap Execution Facility, making it the first fully regulated clearing house that offers clearing services and trading facilities for options based on digital currencies. This authorization is a result of the SEC's determination that DAO tokens are classified as securities and subject to securities laws. Overall, this indicates that the SEC is exploring how existing regulations can be applied to cryptocurrencies.
It seems as if an Exchange traded fund is indeed more likely than ever now. According to a recent Bloomberg Technology interview, Eric Balchunas thinks recent political events are a key driver.
This is particularly interesting given that the SEC recently decided that they would not allow the winklevoss twins to list a Bitcoin ETF earlier this year.
Why Now?
A few weeks ago, CNBC reported that the U.S. Commodities and Futures Trading Commission (CFTC) was completing a review into the matter.
Part of the review entailed deciding whether the Chicago Board Options Exchange (CBOE) will list Bitcoin futures and create a futures market in the US. These cash settled could be launched as early as the fourth quarter of 2018.
There are also plans, claims Balchunas for Bitcoin Options. He pointed to the added liquidity that these options would bring to the market. This liquidity is what was required by the SEC in order to consider listing of any ETF.
He also made an interesting observation about the person who is likely to lead the SEC's investment management division. The contender is the ex lawyer who tried to help the Winklevoss twins list their ETF. This, he claims could lead to more economically liberal policies over the next few years.
Market Implications
Balchunas said that when an ETF is recognised on a market, large scale adoption ramps up exponentially. When there is an ETF, institutional investors can start adding the crypto currency to their portfolios.
An ETF also makes it alot easier for smaller retail investors to buy Bitcoin through their online trading accounts. This could have a large and noticable impact on the bitcoin market.
Many people who will remember how the listing of the GLD gold ETF changed the liquidity on the gold market. The Winkelvoss ETF was closely modelled off of the GLD gold example.
LedgerX Creating a Clearinghouse
There was also news in July that the CFTC had granted LedgerX authorisation as a LLC registerd clearinghouse for digital currencies. This would allow LedgerX to provide clearing services for fully-collateralised digital currency swap instruments.
LedgerX was also given authorisation as a Swap Execution Facility which would make it the first fully regualted one of its kind. That is a clearing house that offers clearing services and trading facilities for options that are based on digital currencies.
This is all off of the SEC's finding in July that the Decentralised Autonomous Organization (DAO) tokens are technically a security and are subject to securities laws. This was seen by CryptoCurrency observers that the SEC will be looking to how its existing laws can be applied to cryptocurrencies.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
