The exchange operator of Cboe Global Markets has said that the U.S. securities regulators should not hinder the development of a bitcoin ETF (exchange-traded-fund) as they are similar to any other commodity-based ETFs.

In January the U.S. SEC said that before a bitcoin ETF could be approved “significant investor protection issues” must be addressed. Other questions about the pricing, storing and settlement of the instrument were raised.

On March 23rd, Cboe President Chris Concannon wrote a letter to Dalia Blass, a Director at the SEC stating Cboe’s belief that existing ETF frameworks can relatively easily be applied to crypto-assets. The letter read:

“Cboe would like to take this opportunity to address certain of these concerns in an effort to further the discussion with a particular focus on exchange-listed Cryptocurrency Funds (“Cryptocurrency ETPs”

The letter started with a brief ‘History of Cryptocurrency’ where Cboe explained the origins of bitcoin and the growth of crypto-assets. Following this the letter discussed certain questions the SEC may have over crypto-assets and their suitability for ETFs.

“While Cboe shares many of the concerns raised in the Staff Letter, we believe that the vast majority of these concerns can be addressed within the existing framework for commodity-related funds related to valuation, liquidity, custody, arbitrage, and manipulation”

These question areas were broken down to the following issues:

Valuation

Liquidity

Custody

Arbitrage

Manipulation and Other Risks

An often-cited concern is that crypto-asset markets are not liquid enough to support financial products such as ETFs safely, however, Chris Concannon stated:

“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”

After detailing responses to the above concerns, Cboe believes that ETFs would provide a safer access to cryptocurrency exposure than traders investing in the underlying asset.

The letter from Cboe was in response to the SECs letter released in January that outlined their concerns over approving an ETF as it could cause market fragmentation and that investors would not be sufficiently protected.