During the conference at a media luncheon on Jan 16, 2019, Ed Tilly, CEO of CBOE (Chicago Board Options Exchange) indicated what is hindering the Growth of Bitcoin Futures and keeping the Wall Street money out of the cryptocurrency market. According to him, Electronic Traded Notes (ETNs) is keeping out wall street’s billions.
Why ETNs are must for the success of Bitcoin Future?
Since Electronic Traded Notes can be denominated in smaller amounts, retail investors can easily access them. On the other hand, an institutional investor who would use Bitcoin futures needs to have a separate account set up to enter into the market. Tilly conveys the importance of ETN as the entry point for institutional investors. He says;
“The power of having that future there is also having an ETN that is more attractive to retail, and then institutions can lay off risk on the listed futures market”,
He asserted that both the products are critical to each other – it becomes a base for both market, wall street and main street. Nevertheless, he sees ETN is easily accessible to average investors and doesn’t have a higher barrier to enter into the market, whereas, Bitcoin futures would demand ‘significant amount of legwork’.
Absent that leg and introducing trackers or notes, I think we will be in this, ‘It trades every day, but it is not the story.
Govt. shutdown delaying the launch of Cryptocurrency products
He says that the regulators are always reluctant to approve ETNs and in tenure of a government closure, it is even more difficult to predict the launch of new products like Ether futures. Moreover, Coingape reported SEC’s latest order on freezing all pending proceeding doesn’t necessarily change the status of Bitcoin ETF Approval. Tilly says that ‘we cannot move for future products;
“I have two regulators that are not taking calls right now, that doesn’t mean there is nothing we are interested in. It means nothing is going to happen in this government shutdown.”
Furthermore, as far as the ETF’s are tied with the regulators, they’re left with a difficult question. With this he says;
“How do I protect the US customer from manipulation in a market that I don’t regulate?. You answer that question, you get your first ETN.”
The #ETF ’s Just Got Interesting, #SEC Freezing All Pending Proceedings As a Result of #GovtShutdown . Question is What happens to filed ETF’s in case SEC does not reply back before the deadline? @MatiGreenspan @APompliano @martin_schwarz @jchervinsky https://t.co/VzG16NtzRu
— CoinGape (@CoinGapeMedia) January 18, 2019
Regulators are Still Uncertain on Cryptocurrency regulations
The launch of first CBOE’s bitcoin futures in 2017 when the Bitcoin prices reached nearly $20000 was a historical entry and the open interest for the future counts 5306 contracts. However, after a year, the number of open interest declined to 3420 contracts. With this, Tilly also talks about the success behind CBOE’s Volatility Index (VIX) futures which significantly has 370,354 contracts in open network on Thursday, 17th Jan 2019. Consequently, he adds that there are a number of financial products in connection with the VIX contract.
“Why is VIX successful? Really calls upon the pool of liquidity in the S&P 500. Oh, and there is an institutional futures contract that is traded at the CME. There is a most successful ETF, SPDR. There are trackers and replicating notes that lever up that exposure. All of that works together.”
While appreciating VIX’s contract, he adds that the crypto market has also tried offering new financial products to the market but regulators are uncertain to approve. Tilly link the growth of bitcoin with the approval of ETFs by regulators however, we have seen SEC in the month of August 2018 has already rejected 9 ETFs including Winklevoss Bitcoin Trust.
Seems like Govt. shutdown is affecting the crypto market and product launches are getting delayed. Further, the rumors that Trump might call for an emergency situation if true is not a very good sign for the cryptocurrency market.