The parent company of the biggest exchange in the world is working on an online platform for trading bitcoin through a somewhat complex instrument called a swap.
Swaps, as the name suggests, are a way for two parties to swap their positions, with the end result being that investors buy and hold actual bitcoin.
But instead of doing so directly, they use a swap instrument, so bringing the activity fully within the regulatory oversight of the Commodities and Futures Trading Commission (CFTC).
According to a report from New York Times, the Intercontinental Exchange (ICE), parent company of NYSE:
“Has had conversations with other financial institutions about setting up a new operation through which banks can buy a contract, known as a swap, that will end with the customer owning Bitcoin the next day — with the backing and security of the exchange, according to the people familiar with the project.”
Details have not been finalized and the plan may still fall apart, but bitcoin has now reached regulatory clarity after being classified as a commodity under the regulatory supervision of CFTC.
The picture remains a bit more uncertain for eth. We have asked CFTC if they consider ethereum to be a commodity, but have not yet received a response.
SEC’s chairman has previously listed ethereum next to bitcoin in differentiating from other tokens which SEC considers as securities, however SEC declined comment when we asked whether eth is or is not a security according to their view.
CFTC and SEC senior officials had a meeting yesterday to presumably co-ordinate on what cryptos fall within which jurisdiction. Venture Capitalists have asked them for safe harbor regarding cryptos which now have a running network, even though they may have begun as an Initial Coin Offering (ICO).
Yet a decision has not been made, so creating uncertainty, with ICE backing away from launching a swap contract linked to eth due to that regulatory uncertainty.
For bitcoin, regulators are in agreement that it is not a security, but a commodity, so giving the green light for it to now be traded in one of the worlds biggest exchange. Paving the way for institutional investors to enter the crypto market.