Exchange-Traded-Notes (ETNs) Essential for the Growth of Bitcoin, Says CBOE Chief

21. Jan 2019 Posted by Akolkar B on News

Ed Tilly, the Chairman and CEO of Chicago Board Options Exchange (CBOE) said that Bitcoin Exchange-Traded-Notes (ETNs) are very essential to drive institutional participation in the cryptocurrency market.

On Friday, January 18, Business Insider quoted Tilly saying that “the growth of Bitcoin in listed markets is still hamstrung by the lack of a trading product geared toward mom-and-pop investors”. Tilly believes that retail investor will put more “trust” in Bitcoin or BTC Futures and Bitcoin ETF if a note like a tracker is tied to it.

CBOE was the first derivatives marketplace to introduce Bitcoin Futures contracts back in December 2017 when the cryptocurrency was trading at its peak. Tilly’s current opinion is quite a contrast to the popular belief that ETFs are more advantageous over ETNs.

However, Tilly’s claims are based on the success of CBOE’s VIX index which has ETNs and trackers. Tilly says that ETN’s low barrier for entry makes them easily accessible to an average investor when compared to the futures contracts.

“The power of having that future there is also having an ETN that is more attractive to retail, and then institutions can lay that risk off on the listed futures market. [...] 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,” he continued.

Tilly explains the reason behind regulators still not approving exchange-traded-products for cryptocurrencies. Tilly says that regulators cannot guarantee investor protection in markets wherein they don’t have the full control. “You answer that question, you get your first ETN,” concluded Tilly.

This year is expected to be crucial to deciding the long-term fate of cryptocurrencies. Along with regulatory action, this year is likely to see major institutional participation taking place. A number of big giants like the Intercontinental Exchange (ICE- NYSE’s parent company), Nasdaq, and other have announced launching their own crypto trading platforms.

As the year unfolds, we expect to have more clarity over the revival possibility of the crypto market after a heavy downfall in 2018.