Chris Concannon, the Chicago-based exchange operator’s president and chief operating officer, said in an interview to Bloomberg that he is quite optimistic and believes to cross the line first in Bitcoin ETF’s race despite the delays and deferment by SEC.
Crypto market healthier and more mature than before
Although SEC has deferred and rejected all the previous applications of Bitcoin ETF, Concannon is still pretty confident of crossing the line.
“As we chip away at their issues to make them less concerned, at some point they’ll be comfortable with an ETF,”
Chris Concannon, the Chicago-based exchange operator’s president and chief operating officer, said in an interview.
Although the regulator is concerned about manipulation in the mostly unregulated digital currency markets, Concannon believes the existence of Bitcoin Futures is a big advantage for ETF to clear the hurdle as it has matured the markets. Bitcoin’s first major step into mainstream finance was in December 2017 when CBOE and the CME Group Inc. started offering futures contracts.
A lot of people and enthusiasts believe that the futures, which are traded in regulated markets, could also serve as the basis for an ETF, rather than the underlying currency to which they are pegged. But Concannon believes having a future based ETF is still untested water as their liquidity levels are fairly low
“Having the underlying futures come to market first, prior to an ETF, I think you have a healthier, more mature market,”
“The problem with a futures-based ETF is, what is the right level of liquidity? It’s never been tested before.”
“I’ve learned that there have been more articles than volume,”
“It’s a little bit shocking to me the attention this market gets versus its size. It’s a fifth of Apple. The entire crypto market is a fifth of Apple.”
While trading volumes in the futures have been low compared with contracts for commodities such as gold or oil, waiting until there is more liquidity to introduce an ETF is a chicken-and-egg problem. An ETF would increase trading in the futures, but the SEC is hesitant to approve it without sufficient liquidity in the underlying futures.
Also, read: Could Bitcoin be in Danger of another Crash?
Q1 2019 is the most likely bet for an ETF clearance
The SEC has been wary of bringing crypto to the masses with an ETF despite speculation one would be endorsed as early as this month. Although that may happen, a lot of analyst and stakeholders on the street believe Q1 2019 is the best bet for an ETF to clear.
“The SEC is likely to delay until February of 2019 and the chances of a Bitcoin ETF approval in 2018 have always been low,”
Hany Rashwan, a chief executive officer of crypto startup Amun Technologies Ltd., said last week.
Earlier this month, Mati Greenspan, Analyst at EToro had also voiced his opinion on VanEck ETF application by saying that,
“the SEC was in no rush to approve the ETF and he believes that most likely they’re going to take their time and then which would mean that on August 10th will be a simple delay of the of judgment. I believe that by the time we get to by the time we get to Q1 of 2019 the market will be much more mature as we discussed previously there’s a lot of OTC desks that are coming online”
With ICE’s Bakkt venture expected to role out in Nov 2018 which plans to provide a federally regulated ecosystem for cryptos, the SEC would definitely want to wait for it to materialize as it would aid in security and also assure no price manipulation. With its points of rejection getting clear-out with Bakkt, Q1 2019 looks the most likely bet.
Will SEC clear the BTC ETF proposal in September or in Q1 2019? Do let us know what you think.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.