Former CFTC chair explains why regulators should approve a Bitcoin ETF

As cryptocurrencies grow in popularity, the U.S. government is getting involved and some politicians are calling for the creation of a Bitcoin ETF. If approved, this would be the first exchange-traded product for a digital currency. However, some critics claim it may be too early to approve such an ETF and that the cryptocurrency market is still in its infancy.

Futures commissioner Christopher Giancarlo was in the spotlight at the end of 2017, when the Securities and Exchange Commission began considering an application from a group of investors to create a fund that would track the price of bitcoin. To this day, there is no Bitcoin ETF. The commission has not ruled out approving one in the future, but it has said that it will not approve one that tracks bitcoin futures. Here’s what Giancarlo had to say when we asked him whether the commission would approve an ETF that tracks bitcoin futures.

Timothy Massad, who was chairman of the US Commodity Futures Trading Commission from 2014 to 2017, outlined why he thinks regulators should approve an exchange-traded bitcoin fund.

In an article published Wednesday on Bloomberg, Massad said the Securities and Exchange Commission, or SEC, should approve bitcoin ETFs in a way that increases transparency and integrity in the burgeoning cryptocurrency industry. This gives investors access to digital assets without having to buy them on exchanges or worry about self-storage.

Massad said the ideal path to adoption of bitcoin ETFs would start with a stronger regulatory framework for cryptocurrencies. However, he acknowledged that the likelihood of this happening in the near future is low. In an interview with Cointelegraph in February, Massad described US regulation of cryptocurrencies as Swiss cheese or full of holes.

In the absence of comprehensive regulation, Massad said, the SEC could use the ETF registration process to improve the integrity of cryptocurrency exchanges.

The approval is granted on the condition that the price of the ETF is based on an equity index that meets certain specific standards similar to those of stock and derivatives exchanges, he wrote.

US securities regulators are reluctant to approve bitcoin ETFs due to concerns about liquidity, transparency and overt price manipulation. Several ETFs have been filed with the SEC and each has been returned to the issuer for review. The SEC is reviewing several filings and has asked the public to comment on the prospectus filed by asset manager VanEck.

Related: Ark Invest’s Katie Wood is working with 21Shares to make a bid for the bitcoin ETF.

According to at least one expert, Todd Rosenbluth, bitcoin ETFs should be approved in at least a year. In April, the CFRA’s head of ETF and mutual fund research told CNBC that regulators are unlikely to give ETFs the green light in the near future.

North of the border in Canada, regulators have approved several bitcoin ETFs and early trends suggest that these offerings are proving to be very successful. Target The Bitcoin ETF continues to attract investment despite a huge correction in the price of bitcoin since May.

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