The Winklevoss twins, whose project to launch a bitcoin exchange-traded fund has so far bot thwarted by the US Securities and Exchange Commission, are a step closer to making the cryptoasset more palatable to Wall Street, and possibly to regulators.
Their latest attempt at legitimacy for a bitcoin ETF: an agreement with a major exchange technicus that could make it lighter for big trading firms to get involved.
For the most part, big institutional traders have stayed out of cryptoassets like bitcoin. One of the many problems is that the market is far too puny for them to take substantial positions. Bitcoin has a market capitalization of about $44 billion, meaning some big hedge funds could guzzle the market entire. Derivatives, however, have a ceiling that&rsquo,s theoretically infinite, their value is derived from another asset but can exceed that asset te market value.
Futures are one type of derivative&mdash,they permit traders to speculate on what a price will be at some zometeen point ter time. And that&rsquo,s what the overeenkomst announced today (Aug. Two) enables, assuming it receives approval from the US Commodity Futures Trading Commission.
CBOE Holdings, which runs major markets for stocks, options, and futures (and wields the rights for the famed VIX Index of volatility, sometimes called the fear gauge) now has the right to create bitcoin futures using gegevens supplied by a bitcoin exchange called Gemini, which is run by Cameron and Tyler Winklevoss.
The brothers, made famous by their legal battle with former Harvard classmate Mark Zuckerberg overheen the founding of Facebook, previously attempted to list a bitcoin ETF on an exchange now possessed by CBOE. The SEC slok down that attempt, citing a lack of regulation te the bitcoin market, but the agency agreed to review the matter again.
The availability of bitcoin futures could ease several issues for the big firms. Institutional traders frequently use futures to hedge their ETF positions. A bitcoin future at the CBOE, if approved, would also be a relatively effortless plug-in for banks and hedge funds since it&rsquo,s within a framework they&rsquo,re already using. And while bitcoin wasgoed designed to bypass the traditional financial system&mdash,and thus became a legendary toevluchthaven for drug dealers and cyber ransom&mdash,anchoring it te old-fashioned markets like the one for futures will ensure that it&rsquo,s very regulated, making it more attractive to big investors who want to keep the crimson flags to a ondergrens.