Are Bitcoin ETFs Back on Board Again?

The general supposition at the Inside ETFs meeting in January portrayed Bitcoin exchange-traded assets as dead in the water when Dalia Blass, director of the investment management division at the Securities and Exchange Commission, wrote a letter bringing out worries around the cryptocurrency vehicles. Blass welcomed fascinated parties to connect with the SEC on the key issues of liquidity, valuation, and custody.

Cboe Global Markets (CBOE), last Friday reacted, by arguing the case for bitcoin ETFs. However, Blass stated in the letter that, "Cboe does not trust that cryptocurrency-related holdings are so much different as to warrant divergent treatment from other commodity-related assets."

The company which operates the first exchange to list bitcoin futures wrote, "while the current bitcoin futures exchanging volumes on Cboe Futures Exchange and CME may not as of now be adequate to help ETPs looking for 100% long or short exposure to bitcoin, Cboe anticipates that these volumes will keep on growing." Volumes could even achieve levels practically identical to other commodity futures products, it said.

Goldman Sachs has contended that bitcoin and its kind are better depicted as "cryptocommodities" as opposed to “cryptocurrencies," yet noticed the contrast amongst bitcoin and gold futures. Head of Goldman’s Global Commodities Research, in a report published last month wrote, "Bitcoin spot trading still happens among a high segmented investor base and on a wide range of spot exchanges. With no huge establishments working across exchanges, there is likely an inadequate scale of arbitrage to drive spreads out of the market." In a similar note, Steve Strongin, head of Goldman Sachs Global Investment Research, said that although bitcoin futures contracts have authenticated crypto to a degree, there are still "various cases of failed futures contracts."

Maybe that is what Cboe's letter truly is about, that is, assuring their investment in crypto offshoots wasn't just for nothing, since futures volumes will, in fact, raise if ETFs that hold those futures contracts get the green light from regulators. Be that as it may, the letter isn't an indication that a bitcoin ETF is on the way, probably not even close. So for the near term, it would seem that Bitcoin Investment Trust (GBTC) will keep on trading at a premium to its net assets value and still charge a huge 2% fee.