The Securities and Exchange Commission is reviewing another application for a Bitcoin exchange-traded fund. The latest proposal comes from Cboe Global Markets on behalf of SolidX Bitcoin Shares, an ET
The Securities and Exchange Commission is reviewing another application for a Bitcoin exchange-traded fund. The latest proposal comes from Cboe Global Markets on behalf of SolidX Bitcoin Shares, an ETF designed by asset manager Van Eck Associates and blockchain startup SolidX Management.
The proposed fund breaks from typical ETF structure in one key way: each share carries a $165,000 price tag and represents 25 Bitcoin. Van Eck designed it for institutional investors rather than retail traders. SolidX CEO Daniel H. Gallancy told CNBC that the high share price targets the fund's intended audience.
Exchange-traded funds operate like stocks, allowing investors to trade them throughout the day at varying prices. A Bitcoin ETF would let people speculate on cryptocurrency without storing it themselves or navigating complex derivative contracts, the way gold or oil ETFs work. Investment companies must obtain SEC approval before selling ETF shares to the public.
Custody has blocked institutional money from entering crypto markets. Large investors cite the shortage of qualified Bitcoin custodians as the main obstacle keeping them out. A regulated Bitcoin ETF on a trusted exchange would eliminate that barrier.
The Winklevoss twins submitted an ETF application in March 2017 that the SEC rejected, citing Bitcoin's unregulated market structure. This marks Van Eck's third attempt to launch a Bitcoin-based ETF. The firm withdrew a Bitcoin-linked application in September 2017 and shelved a Bitcoin futures ETF proposal in January 2018.
Grayscale Bitcoin Investment Trust trades on over-the-counter markets, offering Bitcoin exposure without custody. The instrument trades at a significant premium to underlying holdings but operates without SEC approval. Any SEC-approved Bitcoin ETF would need to track Bitcoin's price with accuracy GBTC cannot achieve.
The SEC created a streamlined approval process for "plain vanilla ETFs" that avoid complex leveraging. Whether Bitcoin qualifies for this faster track or requires additional scrutiny remains unclear. The agency may classify it as an exotic instrument deserving closer examination.
Arthur Hayes, CEO and co-founder of BitMEX, predicted on CNBC's Fast Money that Bitcoin reaches $50,000 by year-end if the SEC approves a Bitcoin ETF. One positive regulatory decision could push the price north of $20,000, he said.
