Chicago Board Options Exchange (CBOE) has filed an application for a bitcoin ETF (exchange traded fund) with the United States Securities and Exchange Commission (SEC). If approved, this could be a huge boost for the entire crypto sphere, as CBOE ranks among the biggest futures exchanges worldwide. Therefore, the long-awaited influx of institutional money into the crypto markets might be just one SEC approval away.
As of right now, CBOE is the third financial institution to apply for the bitcoin ETF license, with SolidX and Gemini (the Winklevoss twins’ project) having already been rejected in 2017 due to lack of universal regulation and crypto-related illicit activities. Back then, there was very little progress in terms of legal crypto frameworks and policies, which is clearly no longer the case.
At the time, SEC released the following statement, “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.“
Leading crypto nations, such as Japan or South Korea have introduced numerous laws and unified regulations since then, in response to numerous controversies surrounding the crypto markets. Digital currency exchanges that operate in those crypto-savvy countries, are now fully regulated financial institutions, subject to constant scrutiny from regulators.
CBOE has also made several attempts to acquire the bitcoin ETF, with the last rejection occurring in March. However, there has been one significant change since then, as the SEC has recently commented it does not consider bitcoin and ethereum to be securities. Such a development gives us hope that the latest CBOE application might be successful and open the door for virtual currencies to be traded as ETFs.
ETF is a marketable security that tracks an index, commodity or bonds like an index fund. It trades on the stock exchange and is a type of fund that owns the underlying assets and divides ownership of those assets into shares. ETF shareholders are entitled to a portion of the profits, such as interest or dividends.
According to official documents, CBOE intends to list and trade bitcoin shares, backed by asset manager VanEck and blockchain company SolidX. The proposal will only trade with SolidX Bitcoin Shares and each share will be worth 25 bitcoin. The fund will acquire BTC in over-the-counter fashion.
Another SEC concern were well-documented security issues that have been hindering the development of crypto markets. CBOE is ready to address that problem and insure its clients against any potential losses, caused by unlawful actions.
The official filing read that, “In addition to its security system, the Trust will maintain comprehensive insurance coverage underwritten by various insurance carriers. The purpose of the insurance is to protect investors against loss or theft of the Trust’s (CBOE) bitcoin. The insurance will cover the loss of bitcoin by, among other things, theft, destruction, bitcoin in transit, computer fraud and other loss of the private keys that are necessary to access the bitcoin held by the Trust (CBOE).“
Should CBOE get the SEC approval, client investment options will be available in the first quarter of 2019.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.