It is undeniable that bitcoin — and the notion of virtual currencies — are becoming mainstream elements of economies on a worldwide scale. Whether or not governments sanction the use of bitcoin is now almost irrelevant to its prevalence in international markets. While it is still an illegal form of trade in some countries, its illegality has never truly deterred its usage, and western countries are slowly but surely setting the precedent for its regulated use in major markets. Bitcoin still has a long way to go in the U.S. in terms of becoming a mainstream, widely-accepted currency, but it is certainly at the most advanced stage it has achieved thus far. On Tuesday, the New York Stock Exchange announced that it is going to start monitoring bitcoin’s value. The NYSE Bitcoin Index (NYBXT) will monitor how much the currency is worth relative to the U.S. dollar using Coinbase, a bitcoin wallet and exchange service headquartered in San Francisco, California in which the NYSE made a minority investment in earlier this year.
The NYSE says that its Index Committee will oversee the rules and methodology behind this project, and it will be responsible for ensuring the accuracy and reflection of “the current nature of the evolving bitcoin market”. The exchange also notes that the committee will be in charge of identifing and reviewing the data sources for the index calculation process.
This announcement comes a week after Nasdaq revealed that it will be adopting bitcoin’s blockchain technology to improve its equity management services through the Nasdaq Private Market. The exchange’s adoption of this digital transaction technology, coupled with the NYBXT’s new eye on bitcoin’s value certainly elevates the currency in the eyes of many financial heads and regulators. Nasdaq’s technological acknowledgement of bitcoin — at least in the sense that it finds the transaction tech reliable enough to employ for its own private trade projects — is a big vote of confidence, and one that will assuage doubts within the American financial market.
The NYSE quotes its President Thomas Farley:
Bitcoin values are quickly becoming a data point that our customers want to follow as they consider transacting, trading or investing with this emerging asset class. As a global index leader and administrator of ICE LIBOR, ICE Futures U.S. Dollar Index and many other notable benchmarks, we are pleased to bring transparency to this market. By combining our technology infrastructure with our expertise in index calculation and data management, we will continue to launch complementary products based on our rigorous standards and proprietary index methodology.
Still, there are many who decry any form of bitcoin regulation whatsoever; they maintain that the premise of bitcoin’s use is its natural deregulation, and it should remain unrestricted by government oversight — especially when so closely monitored by a body as financially intrinsic as the NYSE. Only time will tell how deeply bitcoin and its technologies will be ingrained in the U.S. financial scene.