Exchange holding company, the Chicago Board Options Exchange (Cboe), has written a letter to the U.S. Securities and Exchange Commission (SEC), requesting that they tackle Bitcoin Exchange-Traded Products (ETPs) with a positive mindset. The request was written by Chris Concannon, President and COO of Cboe, in response to a letter written by the SEC’s Director of Division of Investment Management, Dalia Blass, on January 18th 2018. Blass’ statements were aimed at two investment companies and talked about Bitcoin future’s valuation, liquidity, custody, arbitrage and potential manipulation.
Concannon wrote that Cboe was the first securities exchange to list and offer cryptocurrency ETPs. He went on to answer Blass’ questions one by one in detail, saying that these ETPs were similar to other commodity-related funds. In fact, investors currently trade in “less traditional commodities” which pose cryptocurrency-related concerns.
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. As the cryptocurrency markets and infrastructure continue to grow and mature, especially in the spot markets and regulated cryptocurrency derivatives markets, the more easily they will fit within this existing framework. Cboe encourages the Commission to approach Cryptocurrency ETPs holistically and from the same perspective that it has historically approached commodity-related ETPs.
In an interview with Business Insider, Concannon said that market fragmentation existed in currency and the gold ETF market as well. He wrote that any feedback from the SEC would be welcome and appreciated in order to iron out the issues. “This has been a priority for us since we approached the SEC almost a year ago with the Winklevoss brothers and their original Bitcoin filing,” said Concannon. He also added that a positive step towards cryptocurrency ETPs would “ensure that American capital markets remain fertile ground for capital formation and financial innovation.”
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