Breaking with earlier statements by president Bryan Durkin, CME Group Inc. announced on October 31, 2017, that it will launch bitcoin futures in the fourth quarter of 2017, contingent on regulatory review.
“The new contract will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin. Bitcoin futures will be listed on and subject to the rules of CME.” Major bitcoin exchanges and trading platforms like Bitstamp, GDAX, itBit, and Kraken will provide pricing data.
Today, Leo Melamed, chairman emeritus of the CME group, said that bitcoin will likely become a new asset class, calling futures a “very important step for bitcoin’s history.” Melamed anticipated that bitcoin futures will attract major institutional investors. “We’ll tame [bitcoin] into a regular type instrument of trade with rules,” he said.
The distinguished octogenarian also saw similarities between bitcoin and financial futures, which began trading on the International Monetary Market in 1972, when he was serving as chairman of the Chicago Merc. “The world in the 1970s didn’t look at currency trading as a valid instrument of finance,” said Melamed. “I too went from not believing (in bitcoin) to wanting to know more.”
“My whole life is built [around] new technology. I never said no to technology,” he added. “People who say no to technology are soon dead. I’m still that same guy who believes in, at least examining change. That’s what bitcoin represents.”
It’s rather difficult to classify cryptocurrency and tokens using conventional financial definitions. Melamed’s assertion that bitcoin may emerge as its own asset class called to mind recent statements by CFTC commissioner Brian Quintenz, who suggested that tokens may “transform” from securities into commodities.
The CME Group is not the first to offer cryptocurrency derivatives. In mid-October 2017, LedgerX officially began listing swaps as well as put and call options for BTC/USD. However, LedgerX maintains stringent trading eligibility criteria, limiting market participants to high net worth individuals and institutions. ETHNews has reached out to the CME Group to learn the capital requirements for trading bitcoin futures on its platform.