The Chicago Board Options Exchange (CBOE) Global Markets has made an application to the Securities and Exchange Commission (SEC) for a Bitcoin Exchange Traded Fund (ETF) license. This comes after a lot of similar applications have been rejected recently by the SEC. The SEC rejected those applications mainly because of the unregulated nature of the cryptocurrency industry.
So while the SEC has previously rejected applications for other securities, this application might have more of a positive outlook.This is mainly because the SEC recently commented that it does not classify Bitcoin and Ethereum as securities and therefore making them eligible to be traded as ETFs.
This proposal is eligible to trade only with SolidX Bitcoin Shares, with each share worth 25 bitcoin. However, even if the application gets approved, traders will likely not be able to partake in transactions at least before the first few months of 2019. Furthermore, this application, if approved will enable larger institutional investment in Bitcoin.
Looking at previous similar applications, VenEck SolidX Bitcoin Trust put two applications and were rejected by the SEC and the SEC released this statement
Based on the record before it, the Commission believes that the significant markets for Bitcoin are unregulated. Therefore … the Commission does not find the proposed rule change to be consistent with the Exchange Act.
The Winklevoss twins’ fund has also tried to obtain SEC licensing. This shows that a lot of firms have been making similar applications and recent SEC comments direct that a favorable outcome is likely.
So while the SEC and others are still concerned about the extent to which the cryptocurrency market is regulated, it does indicate that it doesn’t count Bitcoin and Ethereum as securities. However, Cryptocurrency remains to be largely unregulated and unattended to by the SEC in the United States which is different from a lot that is going on in the world today from Malta to the EU. Therefore, it is in the SEC’s best interests to start working in this market and industry to enable the US to secure a strong position.
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