If the NYSE has its way, a risky leveraged ETF which doubles the return of bitcoin could soon hit the market

If the NYSE has its way, a risky leveraged ETF which doubles the return of bitcoin could soon hit the market

  • The New York Stock Exchange has asked SEC regulators to list five exchange-traded funds that track bitcoin futures on one of its markets.

  • The ETFs are short-term investment vehicles designed to multiply returns in the cryptocurrency market, the SEC filing said.

  • The NYSE has already issued several bitcoin-related filings to the SEC.

If the NYSE has its way, a risky leveraged ETF which doubles the return of bitcoin could soon hit the market
An improvised message tells passersby to "buy bitcoin" on the University of Oregon campus in December 2017 — the same month the cryptocurrency's price rocketed from $10,000 to nearly $20,000.

The New York Stock Exchange has asked the Securities and Exchange Commission to allow it to list five bitcoin-related exchange-traded funds (ETFs) on one of its markets, according to an SEC filing.

The ETFs were created by Direxion Asset Management to track bitcoin futures trading. While they are not tied to the price of bitcoin itself, the funds aim to multiply investor returns when compared to the underlying market, the filing said.

The instruments, named 1.25X Bull Fund, 1.5X Bull Fund, and 2X Bull Fund, will leverage "investment results (before fees and expenses) that correlate positively to either 125%, 150%, or 200% the daily return of the target benchmark," the filing said.

For each fund, that means a 1 percent rise in the price of bitcoin futures should result in a per-share gain of between 1.25 percent and 2 percent, depending on which Bull Fund is used. However, the potential for higher rewards also comes with higher risk: If the price of bitcoin falls, investors' losses would be multiplied by 1.25.

As such, the funds are not intended for long-term investing, the filing said. The NYSE has issued several filings related to the bitcoin market, including for bitcoin-related ETFs, with the SEC.

If the SEC approves this request, the five ETFs will be listed on Arca, a secondary marketplace on the NYSE. The news was first reported by Business Insider and Reuters.

The NYSE's move comes after two of its rival exchanges, the Cboe and the CME, won approval to list bitcoin futures.

The buzz around bitcoin and its competing digital currencies exploded in 2017, driving a 1,300 percent annual gain in the price of bitcoin. Asset managers have been racing to design more than 10 proposals for bitcoin funds that are currently before U.S. regulators.

New ETFs could make access to bitcoin easier and, in the case of the Direxion product, mean bigger stakes for investors.

The NYSE did not immediately respond to CNBC's request for comment.

Author: Elizabeth Gurdus CNBC

 

Posted by David Ogden Entreprenuer
David ogden cryptocurrency entrepreneur

Forget oil, Russia goes crazy for cryptocurrency

Forget oil, Russia goes crazy for cryptocurrency

 

MOSCOW (AFP) – Standing in a warehouse in a Moscow suburb, Dmitry Marinichev tries to speak over the deafening hum of hundreds of computers stacked on shelves hard at work mining for crypto money.

"The form of currency we are used to is about to disappear," predicts the 42-year-old entrepreneur, who also works as President Vladimir Putin's adviser on internet matters.

Marinichev is one of Russia's leading crypto-businessmen at the helm of operations in this facility larger than a football pitch located in a former Soviet-era car factory, which collects virtual money on the accounts of its clients.

Individuals, or firms like Marinichev's, provide the computing power to run the so-called blockchain which records the world's virtual money transactions. In return for providing that service they receive virtual money, of which bitcoin is the most popular, as payment – a process bitcoiners call "mining".

Mining farms like this represent a growing craze in Russia for bitcoin and other virtual currencies not backed by governments or central banks that are increasingly used for goods and services on the internet.

The hunt for virtual currencies is accessible "to anyone who may be hardly familiar with computer science," Marinichev said. "It's no more complicated than buying a cellphone and connecting to a mobile network." The practice has become so popular in Russia that computer stores in the country have run out of graphic and video cards developed for gamers but are used by bitcoin miners to boost the processing power of their home computers.

Marinichev this week unveiled a more sophisticated setup, inviting investors to pitch in US$100 million to join a mining club and develop a Russian mining chip called Multiclet through his startup.

"The explosion of virtual currency value has made mining profitable enough to make it a professional activity," said Sergei, a 29-year-old computer scientist who runs half a dozen graphics cards plugged into the electrical grid of the company where he works.

He launched his mining operation in March, when the value of bitcoin and its main competitor ethereum, created by Russian-Canadian Vitalik Buterin, reached record heights on the currency's exchange.

Since the beginning of 2017, bitcoin has quadrupled in value, surpassing US$4,000 at the weekend, while ethereum experienced a rise of 4,500 per cent to hit a record of US$374 in June, later falling to US$268 in August.

While the assembly of a mining operation is easy enough, it consumes a large amount of electricity, which can reach the equivalent of several households' needs.

"All my friends who were interested in Bitcoin or ethereum built their devices and plugged them into their corporate networks, and I did the same," Sergei said. "Others cut into the municipal electrical cables."

Russia has a competitive advantage as an environment for mining, as Marinichev points out in a brochure for prospective investors: electricity here costs just 1.3 US cents per kilowatt hour while long winters save money on cooling systems.

Authorities in Russia were long suspicious of virtual money but have now come to recognise it as a force. A new bill is set to be debated this autumn which aims to regulate the possession and creation of crypto currency in the country.

The legal foundation for virtual money has so far been non-existent in Russia and it is associated with illicit activities like hacking and used to purchase drugs on the dark web.

"There is now an understanding at the highest level in the country that virtual currencies are not an absolute evil but a possible good, especially for the economy," said Marinichev.

Putin in early June even held a meeting at an economic forum with Buterin, the 23-year-old creator of ethereum, who lobbied the Russian president to expand the currency's use in Russia.

Last year, Russia's largest banks tested the platform for some of their transactions. The country's central bank even pondered development of a "national virtual currency".

Though at all-time-high in August at US$116 billion, the global cryptocurrency market is still quite young, volatile and prone to speculation.

Bitcoin, for example, lost almost a third of its value between mid-June and mid-July, before gaining it back over the course of a week. Since then, it has been regularly breaking records.

"The rush to virtual money is not a fad or a fleeting phenomenon. The virtualisation of our lives is a market process that has gone on and will continue," Marinichev said.

In a sign of the times, several cafes and restaurants in Moscow this summer began to accept payments in virtual currencies.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

Source: The Straits Times