Text size
Dreamstime
In the past year, investors have gotten new ways to buy Bitcoin, including directly through their
PayPal
accounts. But one important product remains unavailable in the U.S.: a Bitcoin exchange-traded fund.
Cboe Global Markets
(ticker: CBOE), which runs one of the largest exchanges in the country, thinks this is the year when an ETF succeeds, and it’s applying to list and trade one of the candidates. VanEck, an ETF and mutual fund provider, applied at the end of 2020 to create the VanEck Bitcoin Trust.
Both VanEck and Cboe have tried before to get ETFs approved, but the Securities and Exchange Commission has been reticent. The Bitcoin market has long been volatile and many exchanges where it is traded are vulnerable to abuse or manipulation.
Bitcoin has become more popular, but products tied to it don’t always gain wide acceptance. Cboe had been the first exchange to offer a Bitcoin futures product in 2017, but pulled it off the market in 2019 as investors gravitated to Bitcoin futures from its rival,
CME Group
(CME).
So its return to the Bitcoin product market is notable. Laura Morrison, the head of global listings for Cboe, thinks enough has changed in the market to put this ETF over the top.
“We definitely always intended to enter back in, particularly with the launch of an exchange traded product,” she said in an interview with Barron’s. This time, Morrison thinks the chances seem much stronger, for several reasons. Bitcoin has better liquidity than ever, there are more qualified custodians and market-makers in the market — “not to mention that our phone’s been ringing off the hook,” she said.
A Bitcoin ETF started trading in Canada last month, and quickly become enormously popular, but many U.S. investors don’t have access to it through their brokers.
The most important factor in favor of a U.S.-listed ETF may be the change in presidential administrations.
The SEC may now have “a more advanced position given all that we’re seeing,” Morrison said.
Gary Gensler, who was nominated to head the SEC, has taught about cryptocurrencies and blockchain technology at the Massachusetts Institute of Technology. Morrison thinks his interest in the area will lead to more opportunities for companies looking to get involved.
“I was hoping that more would come up during the nomination hearings on the topic, but I do believe based on other public statements that he’s made that he’s just intellectually really interested in what this opportunity could become,” Morrison said.
The SEC did not respond to a request for comment on the agency’s timeline, or the likelihood of approval.
She expects that CBOE and VanEck will hear back from the SEC by November, if not earlier.
Write to Avi Salzman at avi.salzman@barrons.com
