On the 11th of February, the second largest stock trading platform in the world – Nasdaq – launched Ethereum (ETH) and Bitcoin (BTC) indices to present accurate prices for the two top digital currencies in the world. According to Alex Ziupsnys – a digital currency analyst – the digital currency indices launched by Nasdaq might result in the approval of a lot of investment platforms in the long-run.
In a statement, the analyst said: “NASDAQ to add a Bitcoin (BTC) index on its platform. They are reading the writing on the wall and do not want to get left behind. Nothing is stopping this. Adoption occurs slow and steady right in front of you until you finally pause, look around, and Bitcoin (BTC) is the dominant asset. This is very big news. The launch of Nasdaq digital currency indices might result in the regulatory approval for digital currency-based derivatives in the market. And as a direct initial impact, it could also mean more interest from institutional traders. The feeds are going live on the 25th of this month.”
The Approval of an Exchange-traded fund for Bitcoin (BTC) Is a Prime Example
Back in July last year, the proposal for a Bitcoin (BTC) exchange-traded fund filed by the Winklevoss twins was rejected by the United States Securities and Exchange Commission (SEC). The proposal of the Winklevoss twins wasn’t the only one the SEC rejected, as the regulatory agency rejected several other proposals from different companies.
The SEC gave several reasons for its rejection. Among other reasons, the SEC said that the main concern for the rejection is the pricing of Bitcoin (BTC). The regulatory agency said that the risk of price manipulation exists on digital currency trading platforms. As a result of that, an exchange-traded fund for digital currencies can’t be operated due to the value of digital currencies on trading platforms.
The official report published by the SEC stated that small trades can sway the value of Bitcoin (BTC) on trading platforms. As a result of the presence of overseas markets, it is almost impossible to audit all Bitcoin (BTC) transactions.
The report further reads: “This commenter shows concerns about the Gemini Exchange Spot Price, noting that the normal value of the Shares under the proposal is supposed to be tied to the market value of Bitcoin (BTC) at the Gemini Exchange, which is closely tied to the proponents of ETP.
Bitcoin (BTC) Price Today – BTC / USD
In an interview with CNBC in November last year, Jay Clayton – the Chairman of SEC – said that digital currencies have to further become free from manipulation risk and until that happens, an exchange-traded fund will not be approved.
The Bitcoin (BTC) Liquid Index (BLX) and Ethereum (ETH) Liquid Index (ELX) of Nasdaq provide a real-time reference rate or spot for the value of Bitcoin (BTC) and Ethereum (ETH) in USD derived from the most liquid parts of the global market. Nasdaq’s indices are not focused on a small group of trading platforms or over-the-counter trading platforms. Instead, the indices consider all platforms processing digital currency trades and find a reliable spot price.
ELX and BLX might serve as the base prices for Ethereum (ETH) and Bitcoin (BTC) regulated investment vehicles in the long-term. With the emergence of several digital currency indices and Nasdaq’s track record in the financial sector, operators of Bitcoin (BTC) exchange-traded funds could consider using several indices including the ELX and BLX of Nasdaq to find accurate representations of the value of top digital assets.
Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.