by Nuno Menezes
On November 29, Nasdaq Inc (NDAQ.O) announced it was launching a futures contract for bitcoin in 2018, opening the market to a wider audience. The emergence of futures markets should pave the way for an ETF for the cryptocurrency; in early 2017, an ETF bid by the Winklevoss twins was rejected due to concerns surrounding bitcoin exchanges and regulation.
Nasdaq has plans to launch a futures contract based in bitcoin sometime in 2018. While Nasdaq does not have a hard date set for its product, since 2015, the exchange operator company has offered an exchange-traded note based on bitcoin on its Stockholm exchange.
On November 29, the price of bitcoin just climbed to its all-time high of $11,485 (Coinbase) just a day after passing the $10,000 mark. So far, the currency has appreciated more than ten times in value in 2017. Because of this abnormal rise, a lot of concerns have been expressed, and important figures on the world of finance have accused Bitcoin of being in a bubble.
With this announcement, the company becomes the third U.S.-based exchange operator to plan derivatives contracts off of the notoriously volatile digital currency. So far, institutional investors were not getting anywhere near Bitcoin as the security risks and volatility surrounding it are too high. In any case, with the increased media attention the digital currency is receiving and the ever-increasing price surge in 2017, interest in bitcoin investments is increasing by the day.
CBOE Holdings and CME Group, the world’s largest derivatives exchange, have both came forward with their plans to launch futures products based on bitcoin as well. However, they are still pending regulatory approval. In March, the SEC denied a request for CBOE to list what would have been the first U.S. ETF built to track bitcoin.
CME stated its bitcoin futures contract would be based on the CF Bitcoin Reference Rate (BRR), a once-a-day reference rate of the U.S. dollar price of bitcoin, which currently takes prices from four bitcoin exchanges. CBOE will price its bitcoin future off the Gemini Trust, the digital currency exchange founded by brothers Cameron and Tyler Winklevoss. However, the Nasdaq futures contracts plan to use an index that taps into the prices of the cryptocurrency on more than 50 exchanges.
While the Options Clearing Corporation (OCC) clears all Nasdaq futures products, a Nasdaq source also revealed the company was teaming up with New York-based money manager VanEck to develop the futures contract, which will be cleared by the OCC. VanEck had applied to the U.S. Securities and Exchange Commission (SEC) in 2017 to launch a bitcoin-related exchange-traded fund, but withdrew the request in September after speaking with SEC staff, according to a regulatory filing. The Security Exchange Commission is now requesting VanEck to wait until the instruments in which the ETF planned to primarily invest – bitcoin futures contracts – become available for investment. Up until now, VanEck or a representative was not immediately available for comment.
This is, without any doubt, excellent news for ‘Bitcoiners’ as it will certainly help fuel the price rally that we are all watching right now. The crypto showcase is at a record-breaking high, and the Nasdaq announcement is bound to bring a lot of people into bitcoin.