CBOE Recommends That The SEC Allows Bitcoin Exchange-Traded-Funds

Tuesday, March 27, 2018 08.12AM / By Aaron Wood for CoinTelegraph

The exchange operator of CBOE Global Markets wrote a letter to the US Securities and ExchangeCommission (SEC), recommending they not interfere in thedevelopment of a Bitcoin exchange-traded-fund (ETF) because they aresimilar to other commodity-based ETFs, March 23.

ETFsare a type of exchange-traded-product (ETP). An ETF is a marketable securitythat tracks an index, a commodity, bonds, or a basket of assets like an indexfund. ETFs trade like common stock on a stock exchange and typically havehigher daily liquidity and lower fees than shares of mutual funds.

CBOEPresident Chris Concannon’s letter was in written response to a letter issued by the SEC in January 2018 in which,among other concerns, the SEC expressed disquiet over sufficient liquidityincryptocurrency markets, as well as potential risks for manipulation.

Concannonstated that, “As the volumes continue to grow, especially on regulated USmarkets, the overall spot Bitcoin market looks more and more like a traditionalcommodity market and CBOE continues to believe that the spot market issufficiently liquid to support a Bitcoin ETP.”

Concannonadded that, “...CBOE believes that the arbitrage mechanism would functionidentically to other commodity-related ETPs… thereby keeping the price of theETP in line with the price of Bitcoin and limiting the risk of manipulationshares of the ETP.”

Concannonechoed sentiments from a Congressional hearing earlier this month, in whichexperts suggested that existing legislation is sufficient to regulate certainaspects of cryptocurrencies.

“WhileCBOE shares many of the concerns raised in the Staff Letter, we believe thatthe vast majority of these concerns can be addressed within the existingframework for commodity-related funds related to valuation, liquidity, custody,arbitrage, and manipulation,” Concannon wrote in his letter to Dalia Blass, aDirector of the Division of Investment Management.

TheSEC has been stepping up measures against crypto-related companies this year.On March 15 the SEC confirmed dozens of probes into cryptocurrency companies,issuing subpoenas to firms it suspects of flouting securities laws duringinitial coin offerings (ICO). Earlier this week, a source speaking to WSJ said that the SEC will increaseits scrutiny in launching examinations into up to 100 hedge funds.