Cboe’s President and COO Chris Concannon encourages SEC to bring clarity to cryptocurrencies regulation.
Main topics addressed were Valuation, Liquidity, Custody, Pricing, and Risk disclosure concerns.
A few highlights:
“… there is more than sufficient information for Cryptocurrency ETPs to create reliable and robust valuation
methodologies for bitcoin and potentially for other cryptocurrencies”
“As the volumes continue to grow, especially on regulated U.S. markets, the overall spot bitcoin market looks more and more like a traditional commodity market and Cboe continues to believe that the spot market is sufficiently liquid to support a bitcoin ETP”
“Cboe is unaware of any instance in which the Commission has either articulated custodial standards or specifically evaluated the security of custody arrangements for a commodity-related ETP other than to rely on the standards applied by other regulators. For example, Cboe is unaware of any analysis performed regarding vault standards for gold storage prior to the approval of the various physical gold ETPs. (…) we suggest that the Commission either rely on the determinations of other regulators (such as the New York State Department of Financial Services in the case of Gemini) or provide detailed standards for all custodial services for all asset types”
“The arbitrage mechanism for a bitcoin ETP would function identically to other commodity-related ETPs, providing market participants with strong economic incentive to take advantage of arbitrage opportunities in, thereby keeping the price of the ETP in line with the price of bitcoin”
“Applying the existing framework
that would require Cryptocurrency Funds to disclose risks and broker-dealers to perform comprehensive analysis about the suitability of a particular product for their customers will provide sufficient investor information and protection while allowing investors to gain exposure to cryptocurrency-related assets through well-regulated and transparent vehicles.”