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New Proposed ETF Would Encompass Bitcoin Futures Alongside Sovereign Debt Instruments

Reality Shares ETF Trust has filed a proposal for an exchange-traded-fund (ETF) that would invest in a portfolio which includes both sovereign debt instruments and Bitcoin futures.

Reality Shares ETF Trust — a unit of crypto-focused fintech firm Blockforce Capital — has filed a proposal for an exchange-traded-fund (ETF) that would invest in a portfolio which includes both sovereign debt instruments and Bitcoin (BTC) futures.The ETF filing was submitted to the United States Securities and Exchange Commission (SEC) Feb 11.

ETFs are securities that track a basket of assets proportionately represented in the fund’s shares. They are seen by some as a potential ‘holy grail’ that would herald the widespread adoption of cryptocurrencies as a regulated and passive investment instrument.

The proposed fund, to be listed on NYSE Arca, is designed to “provide investment exposure to global currencies, both fiat and virtual currencies, that have been widely adopted for use (e.g., as store-of-value, international remittance, foreign-exchange trading) throughout the world.”

In regard to BTC futures, the fund would initially — if successful — invest via a wholly owned Cayman Islands-registered subsidiary in the cash-settled BTC futures that are currently traded on CBOE Futures Exchange (CFE) and the Chicago Mercantile Exchange (CME).

The filing notes that CFE and CME BTC futures positions will thus be valued “at their respective futures cash settlement values as published […] at the close of each trading day.” It also proposes that the fund may evolve to invest in BTC futures that are traded on other exchanges in the future, but emphasizes that the fund “will not invest directly in [B]itcoin.” The filing adds:

“The Fund may gain most of its exposure to Bitcoin Futures through its investment in the Subsidiary, which invests in Bitcoin Futures. To the extent the Fund invests in such instruments directly, it will seek to restrict its income from such instruments to a maximum of 10 percent of its gross income […] to comply with certain qualifying income tests necessary for the Fund to qualify as a regulated investment company.”

In addition to Bitcoin futures, the proposed fund will also allocate larger investments to more traditional “high-quality, short-term sovereign debt instruments listed for trading on U.S. exchanges and denominated in U.S. dollar, euro, British pounds sterling, Japanese yen and Swiss francs.”

As previously reported, a separate Bitcoin-related ETF by investment firm VanEck and financial services company SolidX — for listing on CBOE’s BZX Equity Exchange — is currently making a circuitous route through various filings with the SEC.

With multiple actors — including the Winklevoss twins — either failing or continuing to await the SEC’s approval of their BTC-related ETFs, crypto entrepreneur and CNBC analyst Brian Kelly has recently claimed there is “no shot” for a crypto ETF to get the regulatory greenlight in 2019.

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NYSE Operator’s Long-Awaited Crypto Platform Bakkt Announces New Key Vacancies

Bakkt, the cryptocurrency platform owned by the Intercontinental Exchange, announced that they are hiring.

Bakkt, the cryptocurrency platform created by the operator of the New York Stock Exchange (NYSE), announced that they are hiring for a number of high-up positions in a tweet Jan. 22.

The Intercontinental Exchange’s (ICE) much-awaited crypto platform published a list of eight evidently new vacancies at the company, all of which are based in Atlanta and New York City. Some of the positions also have Hong Kong, Tokyo, San Francisco, London, Tel Aviv and Singapore listed as available locations.

The page specifies that the company is mostly trying to hire a number of developers, mostly at director and senior levels.

In particular, Bakkt is looking to hire a director of blockchain engineering, a blockchain developer, a director of security engineering, a senior full stack engineer, a mobile developer and a software development engineer in test. Also, the company is looking for a director of finance and at least one institutional sales member.

As Cointelegraph reported on the last day of December 2018, the ICE announced that it “expects to provide an updated launch timeline in early 2019 for the trading, clearing and warehousing” of its Bakkt Bitcoin (USD) Daily Futures Contracts.

On the same day, news broke that the platform had completed its first funding round, raising $182.5 million from 12 partners and investors.

In November, ex-Goldman Sachs partner and founder of crypto investment firm Galaxy Digital, Mike Novogratz, cited Bakkt’s pending launch as a possible catalyst for the crypto market’s next major price action.

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Winklevoss Twins: If Bitcoin ETF Approval Takes Six Years, So Be It

Among other things, 2018 was a tough year for Bitcoin exchange-traded funds (ETFs) applications. Regulatory entities overseeing such proposals quickly quashed the crypto industry’s dreams, denying applications left and right. Yet, the showrunners behind a denied ETF proposal, Cameron and Tyler Winklevoss, believe they have the chops to continue pushing for a green light, in spite of a handful of shortcomings.

Related Reading: Japan Explores Bitcoin ETF but Demand for Product is Mysterious

Gemini Founders: We Need To Get The Bitcoin ETF Right

The Winklevoss Twins, the co-founders behind the fittingly named Gemini Exchange, have recently embarked on a marketing campaign — taking to the streets of New York clad in branded merchandise, putting company logos on subway cars and taxis alike, and appearing on media outlets to talk crypto.

Most recently, after a revealing Ask Me Anything on Reddit, the two Olympians, who are also Harvard graduates, the two made their way to Fortune’s “The Ledger”, the outlet’s in-house column and show centered around blockchain and cryptocurrencies.

The duo, dubbed the Winklevii (Winklevoss + Gemini), noted that although its Bitcoin ETF venture, which purportedly began six years ago, has stalled, they remain committed. Twin Cameron explained that Gemini intends to see “it through,” even if a fully-fledged regulatory go-ahead takes another six years.

Gemini’s president added that he has acknowledged the U.S. Securities and Exchange Commission’s (SEC) objections over such an investment vehicle, touching on his firm’s recent implementation of Nasdaq’s SMART technology. Cameron added that Gemini’s leading involvement in the Virtual Commodity Association, which may improve market surveillance across the board, could also help to quell the SEC’s qualms.

The Winklevoss twin added that the SEC’s hesitance to accept such a vehicle is actually welcomed, explaining that since a Bitcoin ETF will be the first of many crypto-backed products, “we need to get it right.”

Interestingly, Cameron did note that the crypto spot markets and derivatives markets still need to grow, as financial regulators are still skeptical about the lack of liquidity in this nascent sector.

Crypto Commentators Skeptical 

While the Winklevii seems to be trying their utmost to garner regulatory approval, many pundits are skeptical that a BTC-based ETF is in the cards. Speaking to Ran NeuNer, Meltem Demirors, the chief of strategy at crypto asset manager CoinShares, recently explained that the proposal from VanEck, SolidX, and CBOE will “absolutely not” get approved.

Demirors then noted that a regulatory green light is unlikely to bless any other proposals, whether it be from Gemini, Coinbase, or otherwise. She explained that as it stands, the SEC would get no political, financial, or social tailwind from approving a Bitcoin ETF. Instead, Demirors noted that there is solely downside for the financial regulator, especially considering the tumultuous political climate that Americans face today.

The CoinShares C-suite member then explained that many forget that SEC and CFTC incumbents are appointed, and are mandated to stay in line with their party’s mandate. And, with there being nuances regarding America’s stance on fintech and how the nation’s economy should progress, the advent of a properly-backed crypto ETF is that much more quixotic. This has all only been accentuated by the ongoing government shutdown, slated to enter its fourth week on Monday.

In closing, to put a cherry on the proverbial cake, Demirors explained that from a fundamental viewpoint, approval is likely far off, as there remain underlying security and liquidity concerns about the underlying crypto market.

Arjun Balaji, a contributor to The Block, was also skeptical, but in a different, more optimistic manner. He explained that he expects for the VanEck crypto team to accomplish the impossible first, rather than Gemini or any other competitors. However, Balaji did note that there’s a good chance a single-asset (presumably Bitcoin) ETF gets approved sometime over the next 12 months.

In the same “The Ledger” interview, the Winklevoss Twins doubled-down on their optimism on Bitcoin, drawing attention to the asset’s foremost value proposition. The two preeminent industry insiders explained that Bitcoin is simply a better version of gold, but the precious metal just has a 3,000-year head start. Cameron, breaking down the “Bitcoin is a digital form of gold” argument, remarked that if you boil it down, Bitcoin is better at fungibility, scarcity, portability, and divisible than gold itself.

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SEC Commissioner Not Ready to Approve Bitcoin ETF, Worries Fester

To say that advocates of crypto are dedicated would be putting it lightly. Since Bitcoin’s earliest blocks, true innovators have discovered value in the crevices of the cryptocurrency world, finding it logical to latch onto this nascent industry in times of despair and euphoria alike. While this zealous faith in this decade-old innovation has taken many forms over the years, in the recent downturn, investors have sought a newfound light at the end of the tunnel — a U.S.-based, fully-regulated Bitcoin (BTC) exchange-traded fund (ETF).

But, as recently divulged by a commissioner from the U.S. Securities and Exchange Commission (SEC), the advent of a crypto-backed ETF might be nothing more than a quixotic dream, or at least for now.

SEC’s Clayton On Bitcoin ETF: Market Surveillance, Custody Still A Concern

Speaking at the Consensus Invest Conference in New York, SEC incumbent Jay Clayton, who assumed office in May 2017, exclaimed that he isn’t ready to greenlight a Bitcoin ETF.

Giving his heated statement some credence, while referencing the SEC’s role of mitigating investor risk in financial markets, Clayton first brought up the lack of market surveillance in crypto markets.

While blockchains are predicated on a semblance of transparency, in juxtaposition to this nature, the SEC decision-maker noted that there’s an evident lack of bonafide surveillance implementations on crypto platforms at large. Talking with CNBC’s Bob Pisani, also commenting in response to a query regarding a Bitcoin ETF’s prospects, Clayton stated:

“Those kinds of [surveillance] safeguards do not exist currently in all of the exchange venues where digital currencies trade… It’s an issue that needs to be addressed before I would be comfortable.”

He then explained that investors expect that a commodity-backed fund is free from manipulation, alluding to his sentiment that Bitcoin is susceptible to questionable price action on a group’s whim, or through orders executed by bad actors.

Along with his fears regarding proper surveillance measures, Clayton also touched on his opinion that while strides have been taken towards impenetrable custody solutions, these crypto-centric services still are lacking.

Related Reading: Regulatory Green Light: Coinbase Custody to Launch in New York State

Discussing the Bitcoin ETF applications on Consensus Invest’s stage, the recently-appointed SEC commissioner brought attention to “some thefts around digital assets that will make you scratch your heads,” likely referencing situations where startups’ cold storage wallets have been accessed without authorization. Keeping this in mind, Clayton closed off his comments on the matter by noting that storage solutions “need to be improved and hardened.”

Interestingly, Clayton’s comments on the cryptocurrency market contradict statements released by VanEck’s in-house Bitcoin ETF consortium, who sat down with SEC representatives in an October closed-door meeting.

As reported by NewsBTC previously, through a slide titled “VanEck SolidX Bitcoin Trust Should Be Approved,” VanEck’s crypto branch divulged that monumental progress has been made towards solving regulatory qualms, seemingly knocking down the SEC’s most-pertinent concerns in one fell swoop. Most notably, the investment firm claimed that there now “exists a significant regulated derivatives market for Bitcoin,” before adding that CBOE’s rules dictate that market surveillance will be of utmost priority in the proposed vehicle.

Still, with Clayton’s most recent bout of criticism fresh in investors’ minds, the fear that an ETF is still months, if not years away has been rekindled. But then again, there’s a silver lining, as the SEC’s 4,600 employees aren’t known to have homogeneous views on specific markets and products, whether nascent or otherwise.

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Major Swiss Stock Exchange SIX Lists World’s First Multi-Crypto ETP Amidst Market Collapse

The fourth largest European stock exchange, SIX Swiss Exchange, will list the world’s first multi-crypto exchange-traded product next week.

Switzerland‘s principal stock exchange SIX Swiss Exchange will list the world’s first multi-crypto-based exchange-traded product (ETP) next week, the Financial Times (FT) reported Saturday, Nov. 16.

Backed by the Swiss startup Amun AG, the first global multi-crypto ETP will be listed under index HODL, and will track five major cryptocurrencies: Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).

According to the article, each cryptocurrency will acquire a certain market share within the upcoming ETP, with Bitcoin accounting for around half of the ETP’s assets. The rest are set to be divided in fractions, with 25.4 percent in now-second cryptocurrency XRP, and 16.7 percent in Ethereum, while Bitcoin Cash and Litecoin will acquire 5.2 and 3 percent of the market, respectively.

Amun’s co-founder and chief executive Hany Rashwan commented that the upcoming ETF is organized in a way to comply with the same strict policies that are required by traditional ETPs. According to Rashwan, this will provide a well-regulated tool for trading cryptocurrencies for both institutional and retail investors that are limited in the field by crypto-unfriendly environments.

The Amun ETP index will be managed by the German index unit of investment management firm Van Eck, according to major Swiss news agency Finews.com. While Amun AG is based in the Swiss “crypto valley” town of Zug, it is reportedly a branch of Amun Technologies, a U.K.-based fintech company. The firm first announced their plans to introduce a crypto ETP in late September this year, according to Bloomberg.

According to Amun’s official website, SIX Swiss Exchange is the fourth largest stock exchange in Europe with a market capitalization of $1.6 trillion. On Wednesday, Nov. 14, head of securities and exchanges at SIX Thomas Zeeb claimed that blockchain-based digital exchanges will entirely replace conventional ones in “about ten years,” citing a large interest in cost advantages of the technology by brokers, banks, and insurance firms.

ETPs represent a type of security that is priced derivatively and trades intraday on a national securities exchange, based on investment tools such as commodity, a currency, a share price, or an interest rate, according to New York City-based investing and finance website Investopedia. ETPs can reportedly be actively managed funds, including exchange-traded funds (ETFs), and others.

Some experts have predicted that adoption of Bitcoin ETFs will be a “way bigger deal” than a cash settlement Bitcoin futures contract, and hence will be a bigger basis for the growth of crypto markets.

In Sweden, XBT Providers already have a Bitcoin ETP called Coinshares, which has attracted around $1 billion since 2015 when it was listed on major Swedish exchange Nasdaq Stockholm.

Recently, the U.S. Securities and Exchange Commission (SEC) stopped accepting public feedback on their Bitcoin ETFs policy review, following the previous denial of nine applications to list and trade various BTC ETFs from three companies, including ProShares, Direxion, and GraniteShares.