Bitcoin futures debuted on the Chicago Board Options Exchange (CBOE) Sunday. By Monday, some issuers of exchange traded funds were renewing efforts to launch ETFs related to the high-flying digital currency.
On Wednesday morning, one bitcoin was trading at more than $17,000, according to CoinMarketCap.com.
To date, bitcoin ETFs have not been approved by U.S. regulators. Several ETF issuers filed plans earlier this year for such products, but the plans were scrapped because, at the time of those filings, there was not a bitcoin futures market. That changed Sunday and CBOE rival CME is expected to launch bitcoin futures on Dec. 18th with Nasdaq following suit next year.
“REX Shares LLC, Van Eck Associates Corp and First Trust Advisors LP each filed proposals with the U.S. Securities and Exchange Commission since Friday, according to the documents,” reports Reuters.
In late September, VanEck withdrew plans for a futures-based bitcoin ETF because, at the time, the Securities and Exchange Commission (SEC) said it would not approve a fund based on a product that does not exist. However, bitcoin futures could make their debut before the end of 2017.
“The U.S. Securities and Exchange Commission has denied or tabled all bitcoin ETF proposals received so far, but proponents think a successful debut of futures could revive the concept. ETFs could make it easier for investors to bet on bitcoin’s price rising or falling because they can be bought and sold like stocks,” according to Reuters.
Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies. They are also a key component in the creation of many futures-backed ETFs utilized by a range of investors.
Some market observers believe the launch of bitcoin futures will speed the introduction of exchange traded funds based on the digital currency. In recent weeks, several ETF issuers have also filed plans for blockchain ETFs, which would hold stocks with exposure to the digital currency trade.
CBOE bitcoin “futures are based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by brothers Cameron and Tyler Winklevoss, who are virtual currency entrepreneurs,” reports Reuters.
For more information on the cryptocurrency market, visit our Bitcoin category.