The CBOE’s Entry into Bitcoin Trading Would Send Prices Through the Roof

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Here is How the CBOE’s Entry into Bitcoin Trading Would Transform the Market
The SEC has never granted a bitcoin ETF trading application, but the CBOE is in a great position to obtain one. Photo Credit: Varchev

On Wednesday, the headlines widely reported that the Chicago Board Options Exchange (CBOE) had filed an application for a bitcoin Exchange Traded Fund (ETF) with the Securities and Exchange Commission (SEC).

The SEC has never granted a bitcoin ETF trading application, despite repeated attempts by different investment groups to obtain it in the past.

But then again, there has never before been an application like this one. In its application dated June 26, the CBOE, which is one of the largest and most respected, clearing institutions in the world announced that it is partnering with mutual investment firms Van Eyck Investment and SolidX. It has also gone further in its proposal by backing it up with a solid insurance cover to safeguard investor funds in the event of a hack or a system failure.

 

Here is How the CBOE’s Entry into Bitcoin Trading Would Transform the Market
The CBOE, is one of the largest and most respected, clearing institutions in the world.
Photo Credit: Livemint

The CBOE’s reputation and the accompanying insurance safeguard have combined to drive optimism among leading crypto analysts that its application would be granted.

“The key factor that I believe separates the CBOE’s application from everybody else’s is that the CBOE has stated that it has secured insurance for the investors,” Wall Street veteran and leading cryptocurrency analyst Teeka Tiwari said on a post in the Palm Beach Confidential.

“So if there’s a hack, if the keys get lost, if there’s fraud, if anything happens that impacts the value or the security, I should say, of the bitcoin held by that ETF, the investors are covered.”

A bitcoin ETF would allow people to easily buy and sell bitcoin from their brokerage accounts. It would serve as a bridge between traditional finance and the emerging cryptocurrency industry. With a JPMorgan representative saying in February, that a Bitcoin-based ETF would be a “holy grail for owners and investors.”

According to Tiwari, the eventual approval could potentially be the single most important event in the history of digital currencies, bring in institutional investors and take the price of bitcoin up to $65,000 or 10 times its current price of around $6,400.

“When it’s as easy to buy bitcoin as logging in to your Fidelity account and pushing a buy button, you will see tens—if not hundreds—of billions of dollars flow into this ETF and, of course, also flow into bitcoin and the entire cryptocurrency ecosystem.”

Already the SEC has published the application to invite comments from the public in what is one the first steps towards granting ETF approvals. And in June, the commision announced that Bitcoin, Ether, and other decentralized cryptocurrencies cannot be classified as securities.

If the CBOE gets the approval, the Bitcoin ETF will be open to client investment by the first quarter of 2019. An approval which according to Tiwari, is a matter of ‘when’ rather than ‘if’.

“Mark my word, friends, this ETF will get approved,” he said.