Largest US options exchange urges SEC to allow cryptocurrency funds

Chicago Board Options Exchange owner speaks out over SEC blocking Exchange Traded Funds (ETF) that contain cryptocurrencies. 

Cboe Global Markets, the owner of the Chicago Board Options Exchange – the US’ largest ‘options’  exchange, with an annual trading volume well over the billion dollar mark – has called on the US SEC to allow ETF that contain cryptocurrencies, saying there is essentially no difference between those and the range of products currently available.

This goes against what we know about current thinking within the SEC, characterised by a January letter by Dalia Blass, the SEC’s Director of Investment Management, addressing the multiple rejected applications ETF that track the value of a portfolio of cryptocurrencies. The letter – which you can read here – outlines 30 “significant outstanding questions” the commission wanted assurance on before approving any such investment opportunities, and effectively put a moratorium on allowing any such funds going live.

However, according to Reuters, a letter from Cboe Pres. Chris Concannon says that existing rules should suffice to police any crypto-powered packages, and that it believes “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.”

The article then goes on to relate Cboe’s belief that such funds would give investors “a more transparent and accessible way to get exposure to cryptocurrencies”. It also adds that, with something like $70bn in Bitcoin transactions during December, the liquidity of such ETFs shouldn’t be an issue. “As the volumes continue to grow, especially on regulated U.S. markets,” Concannon says, ” 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 [Exchange Traded Product].”

Obviously, Cboe has significant interest in allowing such products in terms of the trading volume and revenue they could potentially create for it, and has offered cash-settled Bitcoin ‘futures‘ contracts in the past. However, to come out so publicly to prod the SEC on the matter still shows significant faith in the idea that Cryptocurrency could eventually become part of at the existing range of investment options for consumers.