On June 26th, The US Securities and Exchange Commission (SEC) received another application from the Chicago Board Options Exchange (CBOE) to list a Bitcoin ETF. This application comes after SEC declined to approve CBOE’s March request to register a Bitcoin Exchange Trade Fund (ETF) from Winkelvoss Twins. Even though SEC dropped CBOE’s earlier request, this latest application might be a silver bullet for getting listed. Judging from the documents presented by the CBOE global markets, the market might register a Bitcoin ETF by Q1 of 2019.
The Bitcoin ETF Application Details
This listing application was first submitted to SEC by CBOE BZX Exchange Inc. on 20th June 2018. Primarily, the board has proposed to list and trade the shares of SolidX Bitcoin Shares (as the fund). In their recommended listing details, VanEck SolidX Bitcoin Trust (as Trust) will allot SolidX Bitcoin under BZX Rule. If the proposal is approved, it will be the first time CBOE BZX Rule will oversee the listing and trading of the trust shares.
Going by SEC’s notice on Registration Statement, a share will represent a beneficial interest in the Trust’s assets that will be worth 25 Bitcoin (about USD 167, 637per share). This condition is likely to keep away retail investors from trading in the Bitcoin ETF. The volatility and high-risk nature of the Bitcoin have been the main argument supplied by SEC for not listing Bitcoin ETF among retail investors. This new requirement adds to the objective of ensuring that safety parameter.
Other details of the application were those drawn from the listing of VanEck SolidX Bitcoin Trust as was approved on 15th September 2016. The features list the Trust for The US federal tax. It also gives a lifeline of the Trust as being without any fixed expiry. If registered, the Trust will be liable to perform the following activities:
Trust activities will be limited to:
- Issuing Baskets in exchange for cash, Bitcoin or both with interested Cash Custodian(s) or Trust.
- Purchasing Bitcoin from exchanges and OTC transactions.
- Selling Bitcoin when necessary to cover the expenses drawn from the Trust’s expenses, sponsors or other liabilities.
- Selling Bitcoin for redemptions when necessary.
- Providing cash and/or Bitcoin as an exchange for the basket(s) surrendered for redemption.
- Maintaining insurance coverage for Bitcoin held by the Trust.
- Securing Bitcoin held by the Trust.
The primary goal of the Trust will be to exhibit the performance of the price of the Bitcoin. In so doing, it will also have to aim at lowering its operational cost through investing in assets in the OTC markets rather than domestic or international Crypto exchange.
Why SEC is likely to approve CBOE’s request to List a Bitcoin ETF
They say, “Where there is smoke, there is fire.” In the case of CBOE’s application to list a cryptocurrency ETF, there seems to be a whole cloud of smoke. Firstly, as I had hinted before, The Securities and Exchange Commission has been receiving such like requests in the past (This being VanEck’s third attempt). With the increasing pressure for listing and the popularity of digital currencies, soon SEC might have to show a white flag.
Also, SEC had earlier on raised various concerns over the security of the cryptocurrency investment. This concern has been continuously raised as a way of protecting the retailer investors. The new proposal seeks to minimize the number of retailer investors by selling shares at 25 BTC.
At the moment, the views entertained are open to speculation as the move to list SolidX Bitcoin ETF will rely upon SEC’s decision. Even so, please let us know your opinions on this application in the comments below.