Since August 2018, we have been hearing about the launch of Bakkt, a startup backed by InterContinental Exchange(ICE) which came up with the idea of launching physical Bitcoin Futures. But the launch has been getting postponed till anybody can possibly imagine. It has really created a lot of hype because of its unique idea and even Bitcoin price increased exponentially for a temporary bit but there is uncertainty about its launch date.
Meanwhile, meticulously, CoinFLEX announced of launching its own future contracts with a leverage of up to 20 times. CoinFLEX is explicit about its idea of supporting not only Bitcoin (BTC) but also Ethereum (ETH) and Bitcoin Cash (BCH). CoinFLEX is a revamped version of CoinFloorEX, which will be spearheaded by Mark Lamb, one of the co-founders of Coin Floor, owned by Roger Ver, Trading Technologies International Inc and supported by B2C2, Grapefruit Trading, Amber AI Group, Alameda Research, Global Advisors, and Dragonfly Capital Partners as well as crypto trader Mike Komaransky.
CoinFLEX is based out of Hong Kong, which is expected to launch in February 2019 and has planned to peg Tether(USDT) as the crypto derivative and means of payment for settling up of the contract. To be precise, one party would receive BTC coins and the other party would be reimbursed in USDT, not USD. There would also be a contract that will trade Tether against the USD Coin (USDC), another stable coin in the market.
Mark Lamb has stated that:
“Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery of future contracts. Volumes are reduced because of a problem of trust when it comes to cash-settled trades.”
Not only Bakkt and CoinFLEX, but there are also other players who have been trying to prove themselves in this front, like Chicago Board Options Exchange (CBOE), BitMEX and Chicago Mercantile Exchange (CME).
CBOE even has plans to launch Bitcoin Futures, but not anytime soon. They have mentioned that they will be launching in the fourth quarter of 2019. Its products will use the XBT ticker like exchanges like Kraken. CBOE swaps more than $2 billion in its contract trade volumes on an annual basis, offering a good number of derivative products for around 2,200 companies, 22 stock indices, and 140 ETFs.
Russell Rhoads, the CFO of CBOE stated:
“The contract multiplier will be 1 so if a contract is trading at parity with bitcoin it will be worth about $7,900 based on current pricing — The minimum tick for a directional, non-spread trade is 10 points or $10, and a spread trade will have a much smaller tick of 0.01 bitcoin or $0.01.”
Bitcoin Futures have already been launched by CME, world's leading and most diverse derivatives marketplace that offers the widest variety of global benchmark products across all major asset classes like Bitcoin Futures.
During its launch, Barry Silbert, founder, and CEO of Digital Currency Group said on CNBC's "Squawk Box."
"I think it is going to enable finally the approval of bitcoin ETFs, and other digital currency ETFs, which is game-changing.”
BitMEX, another notable crypto platform headquartered in Hong Kong, registered in Seychelles, has started offering 100 X leverage which has propelled to have made over 1 billion USD in 2018 and poses a direct challenge to CoinFLEX. But there's is a challenge for the US citizens because of the regulations like not being able to get a deposit address.
It looks like CoinFLEX would be able to launch it sooner than Bakkt. There are quite a few differences between the two.
CoinFLEX is owned by the CoinFloor exchange, plans to support three cryptocurrencies for physically delivered Future contract- Bitcoin Futures, Bitcoin Cash Futures, and Ethereum Futures, with a leverage of 20 times.
Bakkt, on the other hand, is owned by the InterContinental Exchange (ICE)- NYSE parent, planning to launch Bitcoin Futures itself, plans to launch physically backed BTC futures. It has partnered with big names like Boston Consulting Group, Starbucks, Microsoft. Bakkt is still in discussions with Commodities Future Trading Commission, so the date of launch is yet not finalized.
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