Bank of America Sees $1.6 trillion Market for Bitcoin ETF

Bank of America Merrill Lynch outline cryptocurrencies in a recent report in which a Bitcoin ETF is on the list of possibilities.

Chatter about a Bitcoin Exchange-Traded Fund have picked up again as Bank of America Merrill Lynch  and the CEO of an investment banker say at least one could be in place sooner than later.

The creation of a Bitcoin ETF have sputtered on and off over five years or so. Efforts really gained attention when the Winklevoss twins actively pursued creating one. The brothers Tyler and Cameron set about trying to create a Bitcoin ETF, but their efforts were throttled by U.S. Securities and Exchange Commission, which rejected their proposal earlier this year.

Since, there has been continued efforts to create a Bitcoin ETF. This is include the latest, which we will detail here. Bank of America has released a report on cryptocurrencies, and it included how the ETF could be created.

In addition to that, the CEO of ARK Invest says a Bitcoin ETF could be in play in two to three years.

The latest push

The premise behind the latest effort is multi-faceted. Back in play are the Winklevoss twins and the digital assets exchange company they founded called Gemini. They’ve partnered with the Cboe, which operates the largest options exchange in the U.S. called the CBOE.

They are working on a Bitcoin futures project that could be introduced by the end of this year or the beginning of 2018. As part of their efforts, a Bitcoin-exchange traded fund is on the list.

Bank of America’s report details how a Bitcoin ETF could be made possible due to futures contracts.

"The ETF and futures contracts do not depend on each other, but clearly, they would be reinforcing," Bank of America said. "If these efforts to apply existing exchange technology to [bitcoin] work, then this creates a new revenue pool for the exchange industry."

We know that the Winklevoss twins are all in on Bitcoin, but it seems the head of the Cboe may have some reservations. No matter, at a recent conference he said, "like it or not, people want exposure to bitcoin," according to Business Insider.

Bank of America’s report indicates that other players, such as other exchanges, are interested in a Bitcoin ETF, but have been hesitant to actively participate in the formation of one because none have gotten off the ground. The success of Cboe’s and Genesis’ may be just what is needed.

The $1.6 trillion figure

One of the most interesting things to come out of Bank of America’s report is how large it believes a Bitcoin ETF market is. It places the figure at a staggering $1.6 trillion.

"The FX market is highly liquid. For example, spot FX volumes were $1.65tr as of the most recent BIT Triennial survey in April 2016. If these volumes were to materialize, with the same relationship between spot market and futures, and the same revenue per contract, the revenue pool would be about $1.6bn." – Bank of America 

Two to three years

Bank of America’s report comes at the same time an investment management bank’s CEO weighed in. Cathie Wood, the head of ARK Investment Management, told Bloomberg that she sees an active Bitcoin ETF in the next two years.

ARK boasts introducing the first cryptocurrency ETF in the U.S. called the ARK Innovation ETF.