CME Launches Bitcoin Futures Trading December 18 Following CFTC Approval
In what has been a highly anticipated development, a specific date has finally been announced for the launch of Chicago Mercantile Exchange Inc.’s (CME) bitcoin futures. The news comes after they finally got the go-ahead confirmation from the regulator to offer these investment products.
Though the announcement was made earlier, the specific date for launch was only revealed on December 1.
The CME is the largest futures exchange in the world, and it has successfully come through the Commodity Futures Trading Commission (CFTC) testing to be allowed to launch this new product on December 18, 2017.
After the announcement, the price of bitcoin rose as the market anticipates the large influx of institutional money in just under three weeks’ time.
This marks a significant milestone in the lifecycle of both bitcoin and cryptocurrencies as a whole, with it now being seen as a legit class of asset, as well as the launch of bitcoin exchange-traded funds in the very near future.
It was also announced today that Cantor Exchange has become self-certified for getting a new contract when it comes to bitcoin binary options according to the commission. CFTC Chairman J. Christopher Giancarlo stated on December 1:
“Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past. As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets. In working with the Commission, CME, CFE, and Cantor have set an appropriate standard for oversight over these bitcoin contracts given the CFTC’s limited statutory ability to oversee the cash market for bitcoin.”
So far on December 1, the bitcoin price has been buoyed by a rise of around six percent, which comes as some relief to investors after it experienced a 20 percent drop following the record-high of $11,377.73 on November 27.
A lot of people are calling this move by CME as being a game-changer and cryptocurrencies such as bitcoin have a very bright future ahead.
While the CME is the first exchange to launch a bitcoin product, most of the other major exchanges are not far behind them in both the development and the approval process.
CME itself received a bump in its share price thanks to this announcement, sees its shares rising by 1.7 percent to a new record high on December 1. CBOE Futures Exchange (CFE) has also received a lot of positive sentiment following their approval, having ended November 30 at a record close.
As the trading life of these new contracts evolves, the CFTC will be keeping a close eye on any changes, ready to step in if required. This will include in-depth risk monitoring and a partnership with the National Futures Association (NFA) to oversee the evolution of these products.
They met with each of the exchanges in question, developing a plan for how these contracts were to be formed and certain enhancements introduced to ensure that the consumers themselves were protected and the markets were kept in an orderly fashion.
This is a massive deal for the word of bitcoin as it opens up the opportunity for big-money investors to get heavily involved in the bitcoin market without having actually to buy the cryptocurrency itself.
These futures contracts are derivative products that allow investors in basic terms to bet on the price of bitcoin either rising or falling over a specific time period.
This, of course, makes it a lot easier for investors to short bitcoin if they want to, which could lead to large price declines as the amount of money being bet against the bitcoin market increases.
One thing is for certain, by the time December 18 rolls around, all eyes will be on the bitcoin market.