Two sets of bitcoin futures contracts have been launched, with the CBOE Group launching their offering on December 11, and CME Group releasing their futures contracts on December 18, 2017.
Open Door to Institutions
These developments have allowed institutional investors to have more scope when it comes to trading bitcoin, as they no longer have to own the asset itself to trade on whether its price will rise or fall.
With bitcoin prices surging towards the end of 2017, there has been a competition amongst the relevant parties as to who is going to be the first to be able to offer an exchange-traded fund in the United States that will allow investors the opportunity to track this volatile digital currency.
If there were an exchange-traded fund approved by the folks at the U.S. Securities and Exchanges Commission (SEC), this would represent a turnaround to their original approach to this plan. In March 2017, the regulatory body refused the application made by twins Cameron and Tyler Winklevoss to launch such a fund because they said that the primary bitcoin markets are currently unregulated.
However, with CBOE enabling the first derivative products for the digital currency in December 2017, there has been a rush for providers of these exchange-traded funds to push the authorities to get them to approve their new resources based on bitcoin futures rather than tracking the digital currency itself.
From Futures to ETFs
There have been filings that were previously withdrawn by the folks at both Rex ETFs and VanEck after the SEC made their ruling on the Winklevoss twins proposed ETF.
They have been refiled with the focus now being on an ETF based on bitcoin futures. There was also an application filed by the team at Direxion Investments for their bitcoin-based ETF.
As a result of the new futures contracts, there is a much higher chance that the SEC will approve these applications. The markets are becoming more regulated as time goes by and it seems that a comprehensive oversight and regulatory system will be put in place before long.
There is continued speculation in the market, with more and more mainstream members of the public getting involved in this market. An ETF that is focused on the digital currency would be popular amongst investors as it makes investing in it that much easier. Many are not willing or cannot buy bitcoin on an exchange that is not regulated.
There are not very many classes of assets where there is no ETF present, which is why it looks inevitable that these new proposals will be approved.
The Winklevoss twins are even appealing the ruling of the SEC when it comes to their proposed ETF, and it will be an exciting space to watch as if they are successful, it could be another significant boost for the strength of bitcoin.