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Bitcoin Update: Goldman Trading & ETF Filings

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Mainstream acceptance” may still be far for bitcoin, but that does not hold issuers and traders back from showing their absolute interest in bitcoins. The buoyancy in bitcoins may continue ahead even after a whopping 323% rise this year with talks that Goldman Sachs may start trading into cryptocurrencies like it, as reported by Wall Street Journal.

Though there are chances that the bank may not finally end up operating into cryptocurrencies, one thing is sure that the news should give traction to this hot currency. The cryptocurrency segment has survived a host of pessimistic regulatory news out of the U.S. SEC, China and South Korea this year. Yet it has held its head high barring some occasional dips.

If this was not enough, famous issuer ProShares has filed for two bitcoin ETFs. The products are long and short in nature. The two ETFs look to track bitcoin futures contracts traded on the Chicago Board of Options Exchange, as per the filing.

As per an article published on CNBC, “the Chicago Board Options Exchange said it plans to offer bitcoin futures in the fourth quarter or early next year,” following which ProShares’ investment objective will be able to take shape.

More Issuers in the Pipeline

ETF issuer REX also planned a new fund that will invest in bitcoin-based derivatives. There are two products filed by REX, namely REX Bitcoin Strategy ETF and REX Short Bitcoin Strategy ETF. The ticker codes and expense ratios of those funds are yet to be disclosed.

Numerous Japanese have now dipped their toes into the Bitcoin trading, “making Japan’s main Bitcoin exchange, bitFlyer, the largest in the world in recent weeks by some methods of counting.” South Koreans are also indulging in virtual currencies like Ethereum and Ripple.

Regulatory Hurdles

While several issuers are leaning on this product, the SEC is reluctant to giver its nod.After rejecting the filing for an ETF on this cryptocurrency by Winklevoss Bitcoin Trust, the SEC is reviewing its decision once again (read: SEC Reviews Bitcoin ETF: The Skyrocketing Cryptocurrency Explained).

The tussle between the U.S. Securities Exchange Commission and Winklevoss over the launch has been going on for about three years. In fact, the issuer has restructured the proposal for the Bitcoin ETF multiple times. The SEC is seemingly looking for more proof of safety in this trade (read: Will We Finally See a Bitcoin ETF?).

Supporters Pull Out Two Proposals

VanEck, which also filed for a bitcoin futures ETF, withdrew the registration document recently, saying “the SEC told them they would not review the filing until futures contracts on the digital currency start trading.”

If this is the case, then we, along with many other analysts, believe that the same fate maybe waiting for Rex and ProShares. Non-availability ofthe futures contracts could come in the way of their ETF approvals too. Meanwhile, Intercontinental Exchange Inc. (ICE), which planned to launch Grayscale Investments LLC’s Bitcoin Investment Trust (GBTC), reportedly took back its application as it experienced problems with the SEC.

Bitcoin’s Impact on the ETF World?

While it is still unclear if we will get a bitcoin product soon, the sheer success of the cryptocurrencies should benefit semiconductor funds like iShares PHLX Semiconductor ETF SOXX) and VanEck Vectors Semiconductor ETF (SMH - Free Report) . This is because mining of cryptocurrencies needs the usage of semiconductors. A hardware known as an ASIC (Application-Specific Integrated Circuit) is designed explicitly for mining bitcoin.

On the other hand, since some view the currency as “digital gold,” bitcoin trading may snatch some buyers from SPDR Gold Trust (GLD - Free Report) . Bitcoin’s un-correlated nature to the other asset classes and strong momentum may hurt GLD in the current scenario.

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