In consideration of growing demand from institutional and retail investors, ETF.com CEO Dave Nadig stated that the global Bitcoin community is likely to see the emergence of a US-based bitcoin futures ETF by the end of 2017.
During March 2017, the US Securities and Exchange Commission rejected the proposal of the Winklevoss twins to introduce a bitcoin ETF called COIN into US stock markets. At the time, the SEC attributed the rejection of the ETF to the lack of overseas regulation for bitcoin exchanges and investors.
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In response to the decision of the SEC, CoinCenter executive director Jerry Brite wrote:
“The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for Bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation. But this creates a chicken and egg problem. How do we develop well-capitalized and regulated markets in the US and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?”
Since then, the global bitcoin exchange market has significantly matured. Japan and South Korea have emerged as major bitcoin markets, as Japan surpassed the daily trading volume and market share of the US bitcoin exchange market according to market data providers such as CoinMarketCap.com. More to that, South Korea’s largest cryptocurrency exchange Bithumb has evolved into the world’s largest cryptocurrency trading platform, surpassing the daily trading volume on Bittrex and Bitfinex combined.
Japan and South Korea demonstrated a drastic increase in trading volumes and user base due to the implementation of efficient and practical regulatory frameworks. This year, both governments legalized bitcoin as a payment method and as a remittance system, and the South Korean government is expected to provide more clarity in regards to bitcoin remittances in the upcoming months.
Previously, the US SEC rejected the bitcoin ETF of the Winklevoss twins with the premise that overseas bitcoin exchange markets are poorly regulated. However, as evidently demonstrated by Japan, South Korea, and other countries in Asia and Europe, overseas bitcoin markets have become well regulated with practical regulations and policies.
Dave Nadig, CEO of ETF.com, emphasized the rising popularity of exchange-traded notes (ETNs) in European markets such as the Nordic Nasdaq, wherein even investment banks such as JP Morgan are trading shares in Bitcoin XBT, a bitcoin ETN traded in the Nordic Nasdaq exchange, for their clients.
“Yes, you can already trade a derivative in Europe, an exchange-traded note which tracks Bitcoin. Then the race in the U.S. is the race to see what gets approval first. Will it be a Bitcoin future or a straight up Bitcoin holding ETF? My bet is that we will see Bitcoin futures approved fairly quickly,” said Nadig.
Also, Nadig is highly optimistic toward ongoing projects by major financial institutions such as the Chicago Board Options Exchange (CBOE), the largest options exchange in the US, that are planning on introducing bitcoin futures contracts in 2017. Tyler Winklevoss, the CEO of Gemini, the US-based regulated bitcoin exchange, stated:
“Gemini’s key concerns in the cryptocurrency ecosystem have always been security, compliance, and regulatory oversight. By working with the team at CBOE, we are helping to make bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors.”
Considering that the Winklevoss twins have secured a multi-year strategic partnership with a major US financial institution to provide bitcoin futures, as Nadig explained, it is likely that the US SEC will approve the Winklevoss twins’ proposal for a bitcoin ETF.