CBOE CEO Reveals What is Keeping Out Wall Street’s Billions From Cryptocurrency Market?

During the conference at a media luncheon on Jan 16, 2019, Ed Tilly, CEO of CBOE (Chicago Board Options Exchange) indicated what is hindering the Growth of Bitcoin Futures and keeping the Wall Street money out of the cryptocurrency market. According to him, Electronic Traded Notes (ETNs) is keeping out wall street’s billions.

Why ETNs are must for the success of Bitcoin Future?

Since Electronic Traded Notes can be denominated in smaller amounts, retail investors can easily access them. On the other hand, an institutional investor who would use Bitcoin futures needs to have a separate account set up to enter into the market. Tilly conveys the importance of ETN as the entry point for institutional investors. He says;

“The power of having that future there is also having an ETN that is more attractive to retail, and then institutions can lay off risk on the listed futures market”,

He asserted that both the products are critical to each other – it becomes a base for both market, wall street and main street. Nevertheless, he sees ETN is easily accessible to average investors and doesn’t have a higher barrier to enter into the market, whereas, Bitcoin futures would demand ‘significant amount of legwork’.

Absent that leg and introducing trackers or notes, I think we will be in this, ‘It trades every day, but it is not the story.

Govt. shutdown delaying the launch of Cryptocurrency products

He says that the regulators are always reluctant to approve ETNs and in tenure of a government closure, it is even more difficult to predict the launch of new products like Ether futures. Moreover, Coingape reported SEC’s latest order on freezing all pending proceeding doesn’t necessarily change the status of Bitcoin ETF Approval. Tilly says that ‘we cannot move for future products;

“I have two regulators that are not taking calls right now, that doesn’t mean there is nothing we are interested in. It means nothing is going to happen in this government shutdown.”

Furthermore, as far as the ETF’s are tied with the regulators, they’re left with a difficult question. With this he says;

“How do I protect the US customer from manipulation in a market that I don’t regulate?. You answer that question, you get your first ETN.”

Regulators are Still Uncertain on Cryptocurrency regulations

The launch of first CBOE’s bitcoin futures in 2017 when the Bitcoin prices reached nearly $20000 was a historical entry and the open interest for the future counts 5306 contracts. However, after a year, the number of open interest declined to 3420 contracts. With this, Tilly also talks about the success behind CBOE’s Volatility Index (VIX) futures which significantly has 370,354 contracts in open network on Thursday, 17th Jan 2019. Consequently, he adds that there are a number of financial products in connection with the VIX contract.

“Why is VIX successful? Really calls upon the pool of liquidity in the S&P 500. Oh, and there is an institutional futures contract that is traded at the CME. There is a most successful ETF, SPDR. There are trackers and replicating notes that lever up that exposure. All of that works together.”

While appreciating VIX’s contract, he adds that the crypto market has also tried offering new financial products to the market but regulators are uncertain to approve. Tilly link the growth of bitcoin with the approval of ETFs by regulators however, we have seen SEC in the month of August 2018 has already rejected 9 ETFs including Winklevoss Bitcoin Trust.

Seems like Govt. shutdown is affecting the crypto market and product launches are getting delayed. Further, the rumors that Trump might call for an emergency situation if true is not a very good sign for the cryptocurrency market. 

Author: Tabassum
Image Credit

Stock Market Giant Nasdaq and VanEck Will Offer Bitcoin Futures

The world’s second largest stock exchange Nasdaq has announced partnership with U.S. investment firm VanEck aiming at bringing a host of new regulated cryptocurrency financial products to market, including Bitcoin futures.

CoinDesk reported that the partnership was officially unveiled during Consensus: Invest conference. The move to “bring a regulated crypto 2.0 futures-type contract” to the market was announced by Gabor Gurbacs, VanEck’s director of digital asset strategy.

Soon after, Gabor Gurbacs took to Twitter to say the partnership is between Nasdaq and VanEck’s MVIS Indices. Its intention is to bring to market transparent, regulated and surveilled digital assets products, such as Bitcoin futures contracts.

In his tweet, Gabor Gurbacs indicates that new products will use Nasdaq’s SMARTS Market Surveillance system, a cross-market, cross-asset, multi-venue surveillance tool that correlates real-time and historical data with detection patterns to trace illegal market activities such as spoofing and wash trading.

More details are expected to be revealed soon, however, Gurbacs said that upcoming products could be thought of as an “upgrade” to current regulatory standards that surround Bitcoin futures.

Describing SMARTS as a “big policeman engine,” Gurbacs insists the technology would ensure Bitcoin futures trading “in a fair and orderly fashion.”

As of today, the Commodity Futures Trading Commission (CFTC) has approved two Bitcoin futures products – one operated by the Chicago Board Options Exchange in partnership with Gemini Exchange and the other operated by the Chicago Mercantile Exchange in partnership with Crypto Facilities.

These futures contracts are cash-settled, meaning that at expiration no “physical” bitcoins need to be moved in order to settle accounts.

A rival Bitcoin futures product by Bakkt is expected to be launched in January 2019 and will be physically-settled, meaning investors holding these contracts at expiration would receive payment in BTC.

As of press time, it has not been confirmed whether the Nasdaq/VanEck’s futures contract will be cash-backed, or physically settled.

Author: Forklog
Image Credit

NYSE Owner’s Bitcoin Futures Market Will Open in Mid-December

Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), will list its highly-anticipated bitcoin futures contract in less than two months, on December 12.

Known as a physically-settled daily futures contract, the contracts will be backed by actual bitcoins held in ICE’s Digital Asset Warehouse. According to a press release, each futures contract will be validated through ICE Clear U.S., the firm’s clearing venue.

The press release states in part:

“Each futures contract calls for delivery of one bitcoin held in the Bakkt Digital Asset Warehouse and will trade in U.S. dollars and others. One daily contract will be listed for trading each Exchange Business Day.”

Launched in a partnership between ICE — the operator of 23 leading global stock exchange, including the NYSE — and other household names including Starbucks and Microsoft, the Bakkt venture aims to create an open, compliant ecosystem for digital assets.

Bakkt was created to be a “regulated ecosystem” that provides protection for institutional investors who want to get exposure to cryptocurrency. At the time of the announcement in September, Bakkt had said the physical bitcoin futures would be traded against the U.S. dollar, British pound sterling, and euro.

“A critical element to price discovery is physical delivery. Specifically, with our solution, the buying and selling of bitcoin is fully collateralized or pre-funded. As such, our new daily bitcoin contract will not be traded on margin, use leverage, or serve to create a paper claim on a real asset,” Bakkt had said at the time, responding to criticisms that the contracts could mask “hidden leverage.”

For every one purchase of a USD/BTC futures contract, there will be a delivery of one bitcoin into the owner’s account at settlement. That contrasts with the bitcoin futures markets on CBOE and CME, which are cash-settled, meaning that no actual cryptocurrency assets exchange hands at expiration.

Investors in Bakkt’s platform include Mike Novogratz‘s Galaxy Digital, Pantera Capital, and others.

Author:  Jimmy Aki
Image Credit