Industry Updates

Bitcoin ETFs: all eyes on Chicago

David Tuckwell

Three stories and ideas that have made this week in ETFs interesting

1) Chicago could bring in bitcoin ETFs via futures market

Two Chicago-based exchanges are racing for approval to list bitcoin futures on their markets. Cboe, the second largest exchange group in Chicago and home of the VIX, announced in August that it wanted to allow bitcoin futures via Gemini bitcoin market data. This will bring it into competition with local rival CME group, the largest Chicago exchange, which is also trying to get approval for bitcoin futures.

Bitcoin futures are of interest to exchanges and ETF issuers alike because they are needed to make bitcoin ETFs work (the ETF could hold futures for bitcoin exposure). Approval is being sought from the US Commodity Futures Trading Commission.

2) ETFs unmoved by Trump tax cuts and new fed chair

Stock and bond markets and by extension the ETFs tracking them have been unmoved both by Trump's hawkish new Fed chair and his new tax cuts. Why? Because there is nothing particularly surprising about either of them, it would appear. Investors and markets mostly expected Trump's Fed chair to tighten monetary easing somewhat, which has been at historical lows since the financial crisis of 2008. And Trump's tax cuts were entirely anticipated as well, having signaled his intent since the Republican primaries in 2015. As such stocks and bonds had already priced them in.

3) Obama's fiduciary rule in the crosshairs

Obama's fiduciary rule, which required financial advisers to act in their clients' best interests, was a boon for ETFs, as its transparency requirements meant advisers put more money into index tracking products. But now, thanks to Trump, the fiduciary rule could well be killed. Financial advisers have been lobbying behind the scenes to have the rule watered down or removed. And with the Department of Labor applying for an extension in its implementation, the fiduciary laws appear to be dying.


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