Bitcoin futures are here – and binary options, too – which means bitcoin ETFs might be just around the bend!
On December 1, 2017, the Commodity Futures Trading Commission released a statement on the self-certification of new contracts for bitcoin futures products by the Chicago Mercantile Exchange Inc. (CME) and CBOE Futures Exchange (CFE). The independent agency also addressed the self-certification of a new contract for bitcoin binary options by Cantor Exchange (Cantor).
ETHNews has continuously covered the various cryptocurrency derivatives to be offered by CME, CBOE, Cantor, and Nasdaq. As institutions increasingly express interest in digital money, some financiers have shared concerns about cryptocurrency derivatives as a new asset class.
This morning, CME and CBOE excitedly took to Twitter to announce the self-certification of their respective products.
In a statement, CFTC Chairman J. Christopher Giancarlo said, "Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past."
"As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets." The exchanges have "set an appropriate standard for oversight over these bitcoin contracts," Giancarlo added.
Bitcoin exchanges and their underlying cash markets are still in an embryonic stage, and the cryptocurrency markets at large remain predominantly unregulated. The chairman continued:
"There are concerns about the price volatility and trading practices of participants in these markets. We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts' price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages. Nevertheless, investors should be aware of the potentially high level of volatility and risk in trading these contracts."
The CFTC performed some due diligence through conversations with the exchanges, but it appears that everything has come together surprisingly fast. Discussions with CFE lasted four months and discussions with CME took place over just six weeks. With Cantor, the CFTC simply engaged the exchange over the phone. It's difficult to assess the depth of the CFTC's understanding or investigation of the cryptocurrency markets. Amid bitcoin's dramatic ascent to $10,000, it would appear that careful review might be taking a backseat to profit-chasing.