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CBOE Proposes That SEC Allow Bitcoin ETFs



The exchange operator of CBOE Global Markets penned a letter to the US Securities and Exchange Commission (SEC), proposing that they not meddle in the development of a Bitcoin exchange-traded-fund (ETF) because they are identical to other commodity-based ETFs.

ETFs are a kind of exchange-traded-product (ETP). An ETF is a marketable security that keeps track of an index, a commodity, bonds, or a basket of assets like an index fund. ETFs trade such as common stock on a stock exchange and usually have higher daily liquidity and lower fees than shares of mutual funds.

CBOE President Chris Concannon’s message was a response to a letter given by the SEC back in January in which, among other concerns, the SEC expressed unrest over necessary liquidity in cryptocurrency markets, as well as possible risks for manipulation.

“As the volumes continue to grow, especially on regulated US markets, the overall spot Bitcoin market looks more and more like a traditional commodity market and CBOE continues to believe that the spot market is sufficiently liquid to support a Bitcoin ETP,” Concannon said.

He added that “…CBOE believes that the arbitrage mechanism would function identically to other commodity-related ETPs… thereby keeping the price of the ETP in line with the price of Bitcoin and limiting the risk of manipulation shares of the ETP.”

Concannon reiterated sentiments from a Congressional hearing that happened earlier this month, wherein experts recommended that current legislation is enough to regulate specific aspects of cryptocurrencies.

“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,” Concannon said in his letter to Dalia Blass, a Director of the Division of Investment Management.

The SEC has been ramping up measures against crypto-related companies this year. On March 15, the SEC verified probes into cryptocurrency companies, giving subpoenas to companies it suspects of breaching securities laws during initial coin offerings (ICO).

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