Following the launch of Bitcoin futures by the Chicago Board Options Exchange yesterday, Canadian news source The Globe and Mail have reported that a further two fund managers have joined the many existing applications with the SEC for a Bitcoin ETF. The firms in question are REX Shares LLC and Van Eck Associates Corp. Both hope to be the first to offer the financial product and aim to use the futures contracts coming to market to gain access to the Bitcoin price, without having to invest directly in it.
There is widespread optimism amongst many institutional investors that the launch of Bitcoin futures means that an ETF is now a matter of “when” rather than “if”. So far, however, the Securities and Exchange Commission has denied or shelved all similar applications. Proponents of such funds are hoping that the legitimacy that the futures market is bringing to the space could help prompt the SEC to start approving applications.
The most famous of the slew of ETF proposals came from the Winklevoss twins earlier this year. It was denied on the grounds that the currency trades in unregulated markets. Whilst their platform seeks to be the first direct-to-Bitcoin ETF, several other funds presented to the SEC since only seek access to the futures market. This, of course, is regulated, and as such, it’s believed that these stand a much greater chance of being accepted.
Eric Balchunas, an ETF analyst with Bloomberg intelligence told the Canadian news source:
The launch of the futures trading is just one more domino that seems to be falling into place in the approval of a bitcoin ETF.
Meanwhile, in Canada, at least two different firms have publicly filed to launch ETFs. There is growing sentiment from there that they could beat the US efforts to be the first Bitcoin exchange traded fund in North America. This is because their regulatory body are considered more liberal than their US counterparts. Steve Hawkins of Horizons ETFs weighed in on the race to bring the product to market:
“There is an absolute race going on among both Canadian and US players who are scrambling to be the first ETF player in North America… But there is a lot of push back at bank levels, auditor levels, regulator levels and security exchange levels. Much of this push back is around the fact that many don’t know what bitcoin is and that it isn’t your traditional currency, or that it hasn’t actively traded in the market before. Everyone wants to be first doing this in the ETF space, but no one has real experience in the bitcoin market.”
As the futures market settles and more join the CBOE in offering the contracts, there are expected to be many more ETF proposals. In fact, Balchunas believes the number of applications will double or triple by the end of the year:
There’s plenty of space and enough assets that are going to be coming in for issuers to say we want a piece of that and we are willing to compete in that market because there is a big audience in this space and room for several people to thrive.