Exchanges Get Green Light for Bitcoin Futures

Bitcoin futures are “a potentially huge step in the evolution of the digital currency, making trading bitcoin easier" for banks and investors.
Matthew HellerDecember 1, 2017
Exchanges Get Green Light for Bitcoin Futures

In a major boost to the legitimacy of bitcoin, U.S. commodity regulators have cleared the way for two exchanges to trade in bitcoin futures.

The Chicago Mercantile Exchange and Cboe Global Markets both said Friday they had “self-certified” bitcoin futures contracts by proving to the Commodity Futures Trading Commission that the products meet regulatory requirements. The CME plans to launch its product on Dec. 18.

“We are pleased to bring bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities,” Terry Duffy, the CME’s chief executive, said in a news release.

CFTC Chairman J. Christopher Giancarlo sounded a note of caution, saying “the
relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority.”

But on news of the exchanges’ announcements, bitcoin prices soared as high as $10,700 on Friday while CME shares jumped 1.7% to an all-time high.

The bitcoin futures are “a potentially huge step in the evolution of the digital currency, making trading bitcoin easier for Wall Street banks and small investors alike,” The Wall Street Journal said.

According to Fortune, “Bitcoin supporters are hoping that with major derivatives exchanges such as the CME and CBOE in the mix, funds from institutional investors will flow into the cryptocurrency sphere — a phenomenon that could add more stability to the volatile asset.”

The CFTC also said Friday that Cantor Exchange had self-certified a new contract for bitcoin binary options, with all three exchanges agreeing to “significant enhancements to protect customers and maintain orderly markets.” The commission does not officially approve derivatives contracts or endorse their underlying assets.

Earlier this year, the Securities and Exchange Commission, rejected a bitcoin ETF proposal in part because of the underlying asset’s volatility. Barry Silbert, founder and CEO of Digital Currency Group, told CNBC that the trading of futures contracts “is going to enable finally the approval of bitcoin ETFs, and other digital currency ETFs, which is game changing.”