Commodity Futures Trading Commission (CFTC) on Friday, said it will allow CME Group and CBOE to list their Bitcoin futures and CME announced the futures will be available for trading from Dec 18th.
Cantor Fitzgerald also got the node from CFTC. Nasdaq Inc also plans to launch bitcoin futures contract in 2018.
CME Chairman and CEO Terry Duffy said,
“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”.
The companies could, therefore, be the first traditional U.S. regulated exchange markets to launch Bitcoin-related products. The move of launching futures in the traditional markets will certainly open doors to an added regulation of the currency. But also more mainstream adoption, which could boost future demand.
The bitcoin futures provide by CME will be cash-settled which means no bitcoins will change hands at the end of contracts. It refers to CME CF Bitcoin Reference Rate (BRR). Thus, the rate relies on daily price uses the USD bitcoin price across exchanges.
At the same time, Bitcoin prices, which were shaky in the last 24 hours. It went up past the bubble fears to reach $11,084 on CoinMarketCap at the moment of writing this article. However, On Friday, Bitcoin was trading $10539 over 6% higher. Thus, it recovered from drop to $9021.85 over 20% by a record high of $11,377.33 hit Wednesday.
Related Coverage: CME Group to launch bitcoin futures contract by end of this year
Duffy has said the Bitcoin derivative products will be subject to many risk management tools. Therefore, they could help with a volatility of the currency. This could see more institutional investors get in.
“Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point. We recognize bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the Commission and our clients going forward.” At launch, our new Bitcoin futures contract will be subject to a variety of risk management tools. Including an initial margin of 35 percent. It is position and intraday price limits, and a number of other risk and credit control that CME Group offers on all of its products.”
Furthermore, this approach of launching the Bitcoin futures contracts is an exceptional defining point for cryptocurrency industry. Eventually, the first and new bitcoin future trade can be considered as the event that secures bitcoin’s entry into mainstream financial services sector.