Two popular means of investing are ‘Futures Contracts’, and ‘Exchange Traded Funds (ETFs)’. Each are completely different than the other, but popular among investors nonetheless. Due to the popularity and familiarity of such products, service providers have been clamouring for years to establish Bitcoin based variants of each.
While Bitcoin based Futures have been available for multiple years now, there are only a select few companies facilitating them. The majority of which offer contracts settled in USD. Despite being limited to a select few options, we are now seeing an increase in institutional interest surrounding Bitcoin futures contracts. This was most recently highlighted when BlackRock gave approval for each of the following funds to investing in such contracts.
The following are a few of the companies responsible for the past and current development of Bitcoin futures, and sure to attract the attention of more companies like BlackRock.
Chicago Board Options Exchange (CBOE)
In 2017 there was a race between CBOE and CME to be the first company to launch Bitcoin futures contracts. While CBOE won the race, it made the decision in late 2019 to cease offering these contracts, as interest in digital assets was waning at the time. Having already established a blueprint on how to approach such an offering, it should be interesting to see if CBOE ever decides to re-assess its decision to cease its own offering.
Chicago Mercantile Exchange (CME)
Although CBOE initially beat CME bringing Bitcoin futures to market, it is CME that continues offering them today. Not only that, the company has indicated that on February 8th, 2021, it will begin offering Ethereum futures contracts as well.
Despite getting off to a rocky start which was plagued with delays, Bakkt has managed to grow into a popular platform in the years since. Bakkt was notably the first company to offers Bitcoin Futures Contracts actually settled in Bitcoin.
The growth and popularity of Bakkt has recently resulted in the company going public through a ‘reverse merger’ with VPC Impact Acquisition Holdings.
Exchange Traded Funds
Although limited, there are at least options for those wishing to dabble in Bitcoin based futures contracts. This however is not the case in the United States when it comes to ETFs. Over the years, we have seen various companies put forth application to the SEC, in hopes of having a Bitcoin ETF approved – none have been successful to date. The following companies are looking to change the narrative though, as interest in digital assets continues to surge.
Only days ago, Valkyrie became the latest company to file with the Securities and Exchange Commission (SEC), for a Bitcoin ETF.
This particular fund is looking to be hosted on the New York Stock Exchange. If approved, a fund of this kind requires a reputable, and reliable custodial service. For Valkyrie, this requirement would be fulfilled by Coinbase Custody – a service fast becoming an industry favourite.
Only weeks prior to Valkyrie filing for its own Bitcoin ETF, VanEck made waves when it re-filed a previously denied application of its own.
If approved, VanEck indicates that the fund would be accessible through CBOE BZX Exchange. Although the company does not list specifically who it will turn to for custodial services, it notes that the fund would require the vast majority of its assets to make use of cold-storage solutions.
‘The Bitcoin’ Fund is a product of 3iQ, and listed on the Toronto Stock Exchange. Yes, it is in a neighbouring nation, however this fund demonstrates the viability of what is possible for such a product. In the time since its launch, ‘The Bitcoin Fund’ has managed to breach $1B in value.
Surely its multi-year successes and growth will be looked upon by regulators responsible for approving applications such as those by Valkyrie and VanEck.