by Joseph Young
The Chicago Board Options Exchange (CBOE), the largest U.S. options exchange with an annual trading volume of 1.27 billion contracts, is preparing to integrate and launch bitcoin future contracts and options for the public market.
As a part of the integration, CBOE has entered into a multi-year exclusive global licensing agreement with Gemini digital currency exchange, which was founded and operated by the Winklevoss twins, to obtain accurate price quotes and bitcoin data from the Gemini Trust.
Future contracts and options trading on the CBOE will allow millions of accredited investors to invest in bitcoin and speculate its price trend. It is expected that millions of new investors, as well as institutional investors, will be exposed to an entirely new asset class in bitcoin and cryptocurrencies with the CBOE deal. In the upcoming months, the successful integration of future contracts onto the CBOE platform will likely lead to a significant increase in demand towards bitcoin and the cryptocurrency market.
Ed Tilly, the President and CEO of CBOE, explained that the institution decided to offer services around bitcoin due to its innovative and futuristic vision. Apart from bitcoin, CBOE processes and facilitates ETF innovations and foreign exchange and according to Tilly, the addition of bitcoin will be a natural fit for the exchange and its investors.
“CBOE is not only a home to options, derivatives and the VIX but also ETF innovations and foreign exchange. This makes us the natural choice for the development and trading of bitcoin futures,” said Tilly.
He further emphasized that CBOE will play a vital role in the U.S. bitcoin market in addressing the rapidly rising interest shown toward cryptocurrencies and bitcoin by accredited investors and companies.
“We very much look forward to responding to the growing interest in cryptocurrencies through the creation of bitcoin futures traded on a regulated derivatives exchange,” Tilly added.
John Deters, chief strategy officer of CBOE’s parent company, CBOE Holding, also confirmed with CNBC in an exclusive interview that the institution believes cryptocurrencies including bitcoin will continue to grow and compete with leading banking service providers, as well as reserve currencies. Over the past 12 months, the market capitalization of bitcoin has increased from $8 billion to over $46 billion, recording a staggering growth rate in terms of trading volume and user growth.
“We’ve really come to the conclusion recently that cryptocurrencies are here to stay,” said Deters.
Over the next few years, Gemini CEO Tyler Winklevoss stated that CBOE and the Gemini development team would focus on targeting retail and institutional investors in the tightly regulated options, futures, and derivatives market.
“By working with the team at CBOE, we are helping to make bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors,” said Winklevoss.
It is also important to evaluate the decision of CBOE and Gemini to integrate bitcoin services onto the largest options trading platform in the U.S. almost immediately after the execution of the Bitcoin Cash hard fork by China-based mining pool ViaBTC.
The Securities and Exchange Commission (SEC) rejected the COIN bitcoin ETF in March 2017, whereby the Winklevoss twins spearheaded the effort. The latest move with CBOE to launch bitcoin futures contracts increases the likelihood of approval within the next 18 months, according to Blockchain Capital’s Head of Research, Spencer Bogart.
Things have changed. My odds of Bitcoin ETF approval within 18 months are WAY up.
— Spencer Bogart (@bitcom21) August 2, 2017
In March, the SEC stated bitcoin did not meet two of several conditions required to gain approval, “First, the exchange must have surveillance sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.” With futures contracts of bitcoin to be traded on the CBOE, it will mark a significant step toward meeting the conditions laid out by the SEC.