Cboe Global Markets, the derivatives exchange which was also the first to launch bitcoin futures, has recently sent a request to the Securities and Exchange Commission in hopes for allowing cryptocurrency exchange-traded funds (ETFs).
Back in January, Dalia Blass, who is the director of SEC’s division of investment management declined numerous applications which were related to crypto-based ETFs. She cited in a letter targeted to two U.S trade groups – Cboe and CME – that the products suffer from extreme price volatility and other liquidity issues in related funds.
In response Cboe president and COO, Chris Concannon has sent the mentioned letter to SEC on Friday. The letter – which was published online this Monday – reads, “Cboe encourages the Commission to approach Cryptocurrency ETPs [exchange-traded products] holistically and from the same perspective that it has historically approached commodity-related ETPs.” Cboe further incited that “the Commission should not stand in the way of such ETPs coming to market.”
Concannon states, “while Cboe shares many of the concerns raised in the Staff Letter, we believe that the vast majority of these concerns can be addressed within the existing framework for commodity-related funds related to valuation, liquidity, custody, arbitrage, and manipulation. […] Cboe has undertaken significant measures to detect and prevent manipulation in the bitcoin futures market.”
As stated, Cboe was the first major exchange to introduce bitcoin futures. The exchange also applied to SEC for purposes of listing six bitcoin-related exchange-traded funds. Following Cboe, CME – the world’s largest futures exchange also introduced bitcoin future just a week later. This sparked the expectation for more traditional investors to ride the wave of enthusiasm related to cryptocurrency.
However, trading volumes of both bitcoin futures remained light. The futures commission merchants were forced to work with limited client access to the product. And on top of it all, that the decentralized currency itself has lost more than half its value since its peak performance during mid-December.