Bitcoin futures trading by Chicago derivatives exchange operator CME Group will be launched on December 18 as the path has been cleared recently thanks to the regulatory approval.
The announcement of the bitcoin futures trading launch date was made by CME Chairman and CEO Terry Duffy revealing that the exchange has received approval from the U.S. Commodity Futures Trading Commission (CFTC) to begin trading bitcoin futures in just a little over two weeks:
The CEO is optimistic about bitcoin futures trading at CME as he stressed that they have worked closely with CFTC and interested parties to come up with a system that will provide investors with transparency, price discovery and risk transfer capabilities.
One of the key points about bitcoin futures trading is that there will be no handling of bitcoin at all and the futures will be cash-settled. Market data from bitcoin exchanges Bitstamp, GDAX, itBit, and Kraken will be used to calculate CME’s once-a-day Bitcoin Reference Rate (BBR).
However, despite the cash-settlement process, some institutional investors have expressed concern at the addition of bitcoin-derived products to CME. Duffy sought to assuage those concerns by stressing that the contracts will be subject to a myriad of risk management tools to prevent bitcoin’s volatility from having unwanted ripple effects into other markets.
CME is not the only U.S. exchange that is going to add bitcoin futures to their product offerings. CBOE has already expressed its desire to list these products, and — just this week — The Wall Street Journal reported Nasdaq Inc. hopes to list bitcoin futures on one of its U.S. exchanges during the first half of 2018.
The launch of the first bitcoin futures contracts on a regulated U.S. exchange is expected to be a watershed moment for the cryptocurrency industry. Not only will it provide professional traders with the ability to short bitcoin for the first time, but it will also open the door to the creation of a Bitcoin ETF and likely entice Wall Street firms to step off the sidelines and engage directly with bitcoin and other digital assets. Ultimately, the first bitcoin futures trade could be remembered as the event that secured bitcoin’s entry into the mainstream financial services sector.