Money managers in the ETF industry are working on a bitcoin ETF, and the upcoming batch of cryptocurrency-related funds will likely track bitcoin futures.
Cboe Global markets, an exchange operator competing with CME Group to introduce bitcoin futures, recently announced its intent to offer contracts based on Gemini bitcoin market data by the end of this year or early next year, but the exchange is still waiting on approval from the U.S. Commodity Futures Trading Commission, reports Brian Louis for Bloomberg.
Once the exchanges get a green light on bitcoin futures, some anticipate a futures-backed bitcoin ETF is not far in the future.
“With regulated futures of a certain asset class like a bitcoin, you do have an opportunity to introduce ETFs and over time we do envision ETFs coming to market,” Chris Concannon, Cboe’s president, said in an earnings conference call Tuesday.
Last week, CME Group revealed plans t list bitcoin futures before the end of the year. Ed Tilly, Cboe’s chief executive officer and chairman, told Bloomberg that it’s “not surprising CME recognizes the same benefits of offering a transparent market.”
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The exchanges are working on bitcoin futures in response to rising demand to trade cryptocurrency-related products on a platform many traders are comfortable with. Additionally, a futures-backed bitcoin ETF would benefit the Cboe, which lists ETFs on its equities markets.
“The cryptocurrency space is a space that I think we believe in and certainly our competitor across town believes in as well,” Concannon said. “I’m just encouraged by that validation.”
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.
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