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Cryptocurrency Derivatives Series: Spotlight on CME Bitcoin Options and Ethereum Futures in 2020

We saw the conservative approach on cryptocurrencies by US-SEC by stating ‘Bitcoin and Ethereum Are Not Securities’ and constantly declining bitcoin ETF proposals whereas the new Chair of the CFTC (Commodity Futures Trading Commission) and the former Coinbase VP has said today that Ether (ETH) is a commodity – hinting the room for a plethora of newly regulated derivatives products on platforms like the CBOE.

On that line of business, the renowned derivatives marketplace ‘CME Group’ has recently made an announcement to unveil options on its Bitcoin futures contracts by Q1 of 2020.

As the total number of daily transactions of the underlying instrument ‘Bitcoin’ has improved, so have the instruments traded in it.

Well, CME Group has the extensive derivatives mechanism through which clients can effectively hedge or speculate via benchmark options on futures across every investable asset class, with average daily volume of 4.3 million in 2019 to date. 

The company is now intending to improvise hedging and trading arrangements for their clients with such a derivatives instrument (Bitcoin options).

The CME Group Global Head of Equity Index and Alternative Investment Products, Mr.Tim McCourt, said that "Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk, these new products are designed to help institutions and professional traders to manage spot market bitcoin exposure, as well as hedge Bitcoin futures positions in a regulated exchange environment." 

CFTC Chairman Heath Tarbert, at Yahoo Finance’s All Markets Summit in New York, has said “it is my view as chairman of the CFTC that ether is a commodity.” 

Mr. Tarbert reckons sooner or later the crypto-space is most likely to offer ethereum futures contracts as well during 2020.

During the first day of DC Fintech Week, he was scheduled to participate, wherein, he divulged matter of ether futures trading in next year or so, although he raised cause of concern on mere launching a futures contract is not going to be an ultimate solution for everything. 

Furthermore, he went on to appending to his statement, market participants will consider ether’s eligibility for futures contracts.

Well, overall we keep reiterating that Bitcoin Derivatives trading among crypto-avenues has been striking a chord of late.

By Niranjan Patil
  • Market Data
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