Lack Of Bitcoin ETNs Curbing Adoption, Says CBOE Chief
In a recent media luncheon, Edward Tilly, the chief executive at the financial powerhouse that is the Chicago Board Options Exchange, the largest American options exchange, made a surprising mention of Bitcoin and the broader cryptocurrency market.
Speaking to reporters, including those from Business Insider, Tilly, who formerly worked as a market maker for the heavyweight he now heads, noted that Bitcoin volume via CBOE’s vehicles hasn’t seen substantial growth due to a lack of a certain instrument. This financial instrument is an exchange-traded note (ETN), which are often debt-secured, rather than physically-backed, are products that allow mainly retail investors to gain exposure to certain often more-coveted, hard-to-access assets.
Tilly touched on this, noting that Bitcoin ETNs, unlike futures, could be a popular product for America’s average Joes and Jills, specifically due to their “low barrier for entry.” Business Insider claimed that the barriers he was referring to involved account permissions, as futures trading purportedly “requires a significant amount of legwork.” The CBOE chief, who has helped the company’s stock double during his tenure, explained:
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.
Tilly’s comments on the necessity for crypto-linked ETNs don’t come unbacked. More specifically, the finance veteran noted that CBOE’s VIX, a world-renowned index of volatility that is traded by investors en-masse, succeeded due to futures, trackers, and ETNs working in tandem, rather than pure futures.
Yet, the CBOE head did note that there remain regulatory concerns regarding ETNs, along with its cousin the ETF, as manipulation is still purportedly rife in cryptocurrency markets. Tilly even quipped that he has the contacts of two regulators “that aren’t taking calls right now.”
2019: The Year Of Wall Street Bitcoin Forays
Regardless of Tilly’s concerns, many remain convinced that 2019 will be the year for Wall Street to foray into cryptocurrencies head-first.
Per previous reports from Ethereum World News, government-issued currency cynic Jeff Berwick, the so-called “Dollar Vigilante,” told Block TV that he expects for 2019 to hail in Wall Street greenbacks, which will “change the game completely.” Berwick stated that as institutional capital floods in, crypto valuations will “explode” en bloc, as there are presumed trillions waiting on the sidelines.
And interestingly, many pundits believe Berwick’s quip has credence. Just recently, as reported by us previously, BitGo, in collaboration with Digital Currency Group’s Genesis Trading arm, recently revealed that it would be launching an innovative new pseudo-exchange offering.
BitGo and Genesis’ collaborative effort is taking the form of a newfangled over-the-counter (OTC) trading service, which will allow clients to “buy and sell digital assets directly from the security of their BitGo Trust cold storage account.” Genesis, headed by Michael Moro, will provide its expertise in facilitating large-sum, institutionally-sourced transactions, while BitGo will leverage its veteran status in the Bitcoin custody subsector to provide security for the offering. Bitcoin, Ethereum, Ripple’s XRP, ZCash, and three other leading digital assets will be available through this innovative exchange channel.
While this news may seem “same old, same old,” many believe this new venture could spark institutional interest anew. More specifically, in an environment where crypto exchanges (look at Cryptopia) are hacked, BitGo’s secure trading offering, which also touts low fees, copious amounts of liquidity, and rapid transaction processing times, Wall Street firms may begin to clamor.