(Adds background, analyst quote, CME chairman’s quote, bitcoin price)
By Aparajita Saxena
Nov 7 (Reuters) - The major futures exchanges believe in the development of cryptocurrency trading and will push on with launching exchange traded funds that allow investors to trade in them, Cboe Global Markets Inc’s chief operating officer said on Tuesday.
Speaking on a conference call, Christopher Concannon and other Cboe executives declined to say when they expected regulatory approval for a bitcoin exchange traded fund they announced earlier this year.
His tone contrasted with the dismissal of bitcoin as a major financial market by some senior bankers.
“Over time, we do envision (our bitcoin) ETF coming to market once the regulated futures market is built and ... we’re encouraged by everyone’s focus on this space,” Concannon said.
“Overall, the cryptocurrency space is the space that I think we believe in and certainly our competitor across town believes in as well and I’m just encouraged by that validation.”
U.S. exchange operators have been looking to diversify their income avenues to reduce dependency on trading, especially at a time when market volatility has fallen to record lows.
“Their main business has been slow and that can only take you so far. So, they want to participate in fast-growing markets and the market for trading crypto-assets is now large enough for them to participate,” said Gil Luria, director of research at D.A. Davidson.
Luria added that he expects some larger banks to start participating in the cryptocurrency market.
Cboe, the owner of Chicago Board Options Exchange, recently signed a deal with cryptocurrency exchange Gemini for bitcoin data that will support the Chicago bourse’s plans to list bitcoin derivatives. (reut.rs/2iBxSTn)
Rival CME Group Inc, the world’s largest derivatives exchange operator, said last month it will launch a futures contract for bitcoin later this year.
Bitcoin breached the $6,400-mark on the BitStamp exchange after the CME news. The currency is now trading above $7,000.
In an interview with Reuters earlier in the day, CME Chairman Emeritus Leo Melamed said the currency is likely to become a new asset class in its own right, like gold or stocks, which can be traded and regulated.
“We will regulate, make bitcoin not wild, nor wilder. We’ll tame it into a regular type instrument of trade with rules,” Melamed said.
Bitcoin’s legitimacy has often been called into question because of the currency’s association with Silk Road, an online black market for illegal drugs.
China has already forced several bitcoin exchanges to close down, while Russia’s central bank said it would ban cryptocurrency trading websites. JPMorgan Chief Executive Jamie Dimon has blasted cryptocurrency as a “fraud”.
None of that has deterred investors who continue to buy bitcoins, pushing it up more than seven-fold this year.
Reporting by Aparajita Saxena and Nikhil Subba in Bengaluru; Writing by Patrick Graham; Editing by Saumyadeb Chakrabarty