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- 1 The CBOE President emerged in an interview with Bloomberg TV to transmit his views on Bitcoin ETF approval.
- 2 He is anticipating a favorable response from the SEC, which will improve the crypto derivatives market.
- 3 It will also enhance the regulations surrounding Bitcoin derivatives.
The president of the Chicago options exchange, John Palmer recently interviewed with Bloomberg TV and stated their perspectives on the development of the spot bitcoin ETF and its anticipated impact on the market. Moreover, the board expressed that the BTC ETF will lure new institutional investors.
CBOE Digital is the crypto division of the exchange that delivers trading in crypto futures and options. It was introduced in 2022 with the acquisition of ErisX.
CBOE is preparing to present margined Bitcoin and Ethereum derivatives trading on January 11, 2024. It will allow investors to trade the contracts without full collateral supply.
Highlights from Interview
John Palmer shared his view that he is very bullish on the crypto market, given the approval of the ETF. He said that the spot BTC ETF will open up new investment opportunities for institutional and retail investors.
This approval will also open up space for pension funds and RIA-based funds to invest in assets in a spot bitcoin ETF. An RIA is a financial firm accountable for counseling clients on securities investments and managing their investments. It is registered with federal or state regulatory agencies. As of now, some funds are currently unavailable to gain direct exposure to Bitcoin.
The SEC’s approval is scheduled for January 10, 2024. His interview was held just a week before the approval gained attention. Palmer is expecting bitcoin derivatives products to expand significantly after the potential approval.
He stated that institutional investors will rely more on derivative instruments to hedge risks. However, he is not very sure about how things will exactly turn out. Retail investors can also opt for ETF derivatives to hedge existing portfolio risk.
Expected Impact of Spot BTC ETF
He highlighted the probable changes that will occur in the market with the approval of the spot bitcoin ETF. Some of the impacts that Palmer pointed out are mentioned below.
Growth of Crypto Derivatives
With the approval of the spot BTC ETF, it will grow the ecosystem of crypto derivatives. It will broaden the investment instruments for both institutional and retail investors.
ETFs will change institution’s approaches to derivatives.
Risk Hedging
With the approval of the spot BTC ETF, it will be easier for institutional investors to hedge risk. With the development of ETFs, even retail investors will be attracted to hedge risk using these ETF instruments.
Role of Leverage in Crypto ETF
It will increase the efficient use of capital and allow investments even with a lower margin. It will increase the exposure to a greater number of securities with the change in leverage requirement. The main difference between domestic and international investment lies in its leverage margin.
Conclusion: Regulatory Changes
Spot Bitcoin ETF will improve the regulatory environment in the crypto space. The spot ETF will be a regulated model for investing in crypto assets. So, it will attract a risk-averse segment of investors to crypto instruments.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
