Chicago-based crypto exchange Bitnomial has obtained an approval from the US Commodity Futures Trading Commission (CFTC) to start trading Bitcoin futures.
Contracts will be physically settled on the platform, ensuring that clients get the actual Bitcoin (BTC) at the expiry of a contract rather than cash, Decrypt website reported.
Luke Hoersten, Bitnomial CEO, said:
“User-acceptance testing—the last phase of testing before the platform is production-ready—on Bitnomial will kick off on April 27. After that, trading will be subject to customer readiness.”
Once the futures curve stabilizes, Bitcoin futures, mini Bitcoin futures, and Bitcoin options will be available for trading, Hoersten added.
The exchange’s Bitcoin futures will have a contract size of 1 Bitcoin (nearly $7,000 at current prices), with quarterly contracts. Meanwhile, Deci Bitcoin contracts will also have a contract size of 1/10 Bitcoin (almost $700 at current prices), with quarterly contracts.
It is worth mentioning that Bitcoin derivatives have been available in the US since December 2017, when cash-settled Bitcoin futures were released by CME and Cboe. This took place when the Bitcoin hit its highest level of around $20,000.
In March 2019, Cboe stopped Bitcoin futures listings amid falling volumes. Meanwhile, CME has seen strong demand from investors.
Cash-settled contracts have several advantages
Cash-settled contracts have several benefits as you don’t really have to buy Bitcoin to trade in the exchanges. In addition, when settling contracts in BTC, this will add responsibility of managing your BTC wallet and keeping your keys.
Hoersten went on to say:
“While there have been a few attempts at cash-settled futures in the US, there has been only one attempt at margined, physically delivered futures on Bitcoin in the US. But there are many different decisions and nuances to building a successful product, especially with crypto-related products.”
Cryptolydian earlier reported that the CFTC has given the go-ahead for New York Digital Investment Group (NYDIG) to launch its Bitcoin Strategy Fund.
The fund would target Bitcoin futures, so the total value of the Bitcoin futures held by the fund would hit approx. 100% of its net assets.
Mr. Matt Hougan, the managing director of Bitwise Asset Management, said his company has a competitive edge at achieving success in Bitcoin ETF history despite SEC rejections previously.