CME plans to launch bitcoin futures by year-end

CME announced Tuesday of which plans to launch bitcoin futures within the fourth quarter, pending regulatory review.

Bitcoin rose to a record high above $6,400 Tuesday morning, according to CoinDesk, after the announcement by the entire world’s largest futures exchange.

“Given increasing client interest within the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract,” Terry Duffy, CME Group chairman as well as CEO, said in a statement.

Duffy added on CNBC’s “Closing Bell” of which he is actually “confident” the CME’s self-certification process at the U.S. Commodity Futures Trading Commission as well as full application process will go through. “We’ve been working with the regulator. They understand our application. as well as they understand our design very, very well,” Duffy said.

The leading global exchange for options as well as futures trading is actually the latest entrant into the business of offering derivatives for bitcoin, the volatile digital currency, which is actually not listed on a major exchange.

Bitcoin over the last 12 months

Source: CoinDesk

The bitcoin futures contract will be cash-settled as well as based on the CME CF Bitcoin Reference Rate (BRR), which CME launched in November 2016 with London-based digital trading platform Crypto Facilities. The reference rate is actually a daily settlement cost published at 4 p.m. London time, currently noon ET.

In less than 10 years, bitcoin has come a long way coming from being “mined” in homes as well as predominately used to buy illegal goods online. An entire industry has emerged to mine bitcoin, sell digital mining equipment as well as offer bitcoin trading services.

The growth of bitcoin derivatives is actually another step toward the development of the digital currency as a more established asset class. Fundstrat’s Tom Lee said his call for bitcoin to top $20,000 by 2022 is actually based partly on expectations of which bitcoin derivatives products will launch.

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