Tuesday, October 31, 2017

Bitcoin derivatives: CME to launch cryptocurrency paper futures contract before end of year

Earlier this year, Coindesk created and implemented options trading for Bitcoin which established the first form of derivatives for the cryptocurrency.  Now an announcement by the Chicago Mercantile Exchange (CME) on Oct. 31 is adding a new form of derivatives trading to Bitcoin through the introduction of a futures contract to be initiated sometime before the end of 2017.

Full CME Statement: 
CME Group, the world's leading and most diverse derivatives marketplace, today announced it intends to launch bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods. 
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. 
"Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract," said Terry Duffy, CME Group Chairman and Chief Executive Officer.  
"As the world's largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities." - Zerohedge
Dependent upon one's perspective, Bitcoin appears to have hit the big time through its being financialized on Wall Street.  Yet on the other side of the coin (pun intended) for Bitcoin purists, a large fear has emerged since the cryptocurrency has now been co-opted from its original scope as a de-centralized virtual currency once hailed for being completely outside the system.

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