The Chicago Board Options Exchange (CBOE), the exchange house specialized in derivative products, filed an application with the United States Securities and Exchange Commission (SEC) to list the shares of the listed fund of bitcoin (ETF), already introduced by Van Eck before the same commission and pending approval. The same request from CBOE reflects that the leading institutional investment firm, State Street, was appointed as the fund manager of this ETF.
This Monday’s request from CBOE starts running the SEC clock to give resolution to the ETF. Once notified of the request, you will have 45 days to decide whether to approve or reject VanEck’s proposal.
From CBOE’s point of view, this represents your return to driving. of bitcoin-based products, after suspending, two years ago, the commercialization of bitcoin futures contracts , a fact reported by CriptoNoticias in March 2019.
The CBOE compares in its request the state of the bitcoin market between the moment of the first request for an ETF, in June 2016, and the current development of the same. The CBOE highlights that the market capitalization of bitcoin at that time was USD 10 billion, and that this year it remains close to a trillion dollars . In addition, it highlights the growth of institutional investment in bitcoin and the authorizations that the SEC itself has issued to authorize cryptocurrency custody programs to established financial institutions.
In support of the ETF you wish to trade , CBOE refers to the great growth of the Grayscale bitcoin fund (GBTC), but criticizes that access to the shares of that fund is limited only to large investors. The premium price of GBTC shares is another limitation , notes CBOE, while arguing that, with an ETF, there are only minimal commissions, in addition to access for any investor .
As such, the exchange believes that this proposal acts to limit risk for US investors, who are increasingly seeking exposure to bitcoin by eliminating premium volatility and lowering fees, through significant competition, by providing direct 1 to 1 exposure to bitcoin in a regulated, transparent and publicly traded vehicle.
CBOE says that for investors retailers there is an advantage in the ETF over the direct purchase of bitcoins, and this is the existence of a custodian. Without mentioning the custodial company chosen, it says that it is a company licensed by the New York Department of Financial Services (NYDFS).
State Street will manage the funds of the ETF
In exposing VanEck’s ETF proposal, CBOE reveals that the institution targeted as fund manager will be State Street, a global provider of financial services with at least 3.5 trillion dollars of assets under its management , according to its report at the end of 2020.
State Street confirmed, through a press release published this March 2, that, in addition to its administrative role, it will serve as a transfer agent for the VanEck ETF. It will also support in areas such as custody of shares, order taking, fund accounting, among others.
VanEck’s relationship with State Street dates back to 2016, when they began providing services for its ETF in Australia, and subsequent ones in Ireland and the Netherlands. State Street Global Markets Leader Nadine Chakar expressed her pleasure in continuing to expand her relationship with VanEck in the cryptocurrency industry.
“We see the implementation of digital assets as one of the most transformational forces that will affect our industry in the next five years, and we are already very committed to clients and partners in delivering solutions.”
Nadine Chakar, State Street Global Markets Leader.
Listed investment funds, or Exchange Trade Funds (ETFs), are investment instruments that track the performance of an asset or a group of assets , but the asset is not bought directly, but a share that follows the price of that asset. For example, a Bitcoin ETF would track the price of bitcoin, and a stock in that ETF would rise if the price of Bitcoin rises. However, bitcoins are not bought directly.
The portion of bitcoin contained in each share or net asset value (NAV) in the share, is determined by the issuer of the ETF. ETFs usually offer low NAV stocks to make it easier for a larger number of investors to acquire. For example, an approved Van Eck Gold ETF offers stocks with a NAV that is currently $ 16.89. The stock of Grayscale’s bitcoin fund, which has been compared to an ETF, is now costing $ 45.
The success of the ETF launched on the Stock Exchange is also mentioned in the document. . Toronto on February 11, and that it was reported in this medium. This ETF, issued by Purpose Investments, raised USD 421 million in its first two days of commercialization.