It seems as if an Exchange traded fund is indeed more likely than ever now. According to a recent Bloomberg Technology interview, Eric Balchunas thinks recent political events are a key driver.
This is particularly interesting given that the SEC recently decided that they would not allow the winklevoss twins to list a Bitcoin ETF earlier this year.
Why Now?
A few weeks ago, CNBC reported that the U.S. Commodities and Futures Trading Commission (CFTC) was completing a review into the matter.
Part of the review entailed deciding whether the Chicago Board Options Exchange (CBOE) will list Bitcoin futures and create a futures market in the US. These cash settled could be launched as early as the fourth quarter of 2018.
There are also plans, claims Balchunas for Bitcoin Options. He pointed to the added liquidity that these options would bring to the market. This liquidity is what was required by the SEC in order to consider listing of any ETF.
He also made an interesting observation about the person who is likely to lead the SEC's investment management division. The contender is the ex lawyer who tried to help the Winklevoss twins list their ETF. This, he claims could lead to more economically liberal policies over the next few years.
Market Implications
Balchunas said that when an ETF is recognised on a market, large scale adoption ramps up exponentially. When there is an ETF, institutional investors can start adding the crypto currency to their portfolios.
An ETF also makes it alot easier for smaller retail investors to buy Bitcoin through their online trading accounts. This could have a large and noticable impact on the bitcoin market.
Many people who will remember how the listing of the GLD gold ETF changed the liquidity on the gold market. The Winkelvoss ETF was closely modelled off of the GLD gold example.
LedgerX Creating a Clearinghouse
There was also news in July that the CFTC had granted LedgerX authorisation as a LLC registerd clearinghouse for digital currencies. This would allow LedgerX to provide clearing services for fully-collateralised digital currency swap instruments.
LedgerX was also given authorisation as a Swap Execution Facility which would make it the first fully regualted one of its kind. That is a clearing house that offers clearing services and trading facilities for options that are based on digital currencies.
This is all off of the SEC's finding in July that the Decentralised Autonomous Organization (DAO) tokens are technically a security and are subject to securities laws. This was seen by CryptoCurrency observers that the SEC will be looking to how its existing laws can be applied to cryptocurrencies.
