CBOE Submits Application to The SEC Seeking Bitcoin ETF License
The U.S Securities and Exchange Commission (SEC) has recently received an application from the Chicago Boards Options Exchange (CBOE) for a Bitcoin-based exchange-traded-fund (ETF) license with an aim to attract more number of institutional players to the crypto market.
The applications notes that the process of filing initially started last month in June 2018 with the CBOE filing it through the VanEck SolidX Bitcoin Trust - a joint venture between financial firms VanEck and SolidX.
As per the filing, the Trust will be using the investor funds only in Bitcoin and CBOE will also be providing an over-the-counter facility to its accredited investors. The application document reads: “According to the Registration Statement, the Trust will invest in bitcoin only. The activities of the Trust are limited to: issuing Baskets in exchange for the cash and/or bitcoin deposited with the Cash Custodian or Trust, respectively, as consideration; purchasing bitcoin from various exchanges and in OTC transactions; delivering cash and/or bitcoin in exchange for Baskets surrendered for redemption; maintaining insurance coverage for the bitcoin held by the Trust; and securing the bitcoin held by the Trust.”
After facing rejections twice in 2017, the SolidX Trust will be applying for Bitcoin ETF for the third time. However, at that time, the SEC reasoned the rejection citing lack of overseas regulations and price manipulation. However, now major crypto markets like Japan and South Korea have worked on their cryptocurrency regulation framework and policies creating a more conducive and healthy environment in the crypto market.
Previously, the SEC had also expressed concern regarding the lack of insurance for crypto investors. The crypto insurance is basically to ensure the safety and protection of investor’s fund. The CBOE is said to have worked on this matter and will be providing its investors with complete security of their funds.
The CBOE filing states: “In addition to its security system, the Trust will maintain comprehensive insurance coverage underwritten by various insurance carriers. The purpose of the insurance is to protect investors against loss or theft of the Trust’s bitcoin. The insurance will cover loss of bitcoin by, among other things, theft, destruction, bitcoin in transit, computer fraud and other loss of the private keys that are necessary to access the bitcoin held by the Trust.”
It further adds: "The insurance policy will carry initial limits of $25 million in primary coverage and $100 million in excess coverage, with the ability to increase coverage depending on the value of the bitcoins held by the Trust.”
In addition to this, the SEC is also said to be working on open-ended and low-risk ETFs to increase innovation in the crypto financial space.