The Commodity Futures Trading Commission (CFTC) has approved bitcoin futures contracts for the CME Group and CBOE Global Markets. CME Group will begin trading the contract on its CME Globex platform from December 18th. Both exchanges will operate under a self-certified system requiring each to monitor, share data with the CFTC and report any market manipulation and abrupt changes.
Why It’s Important
Regarding the futures contract, “it can be purchased by lots of institutional investors who wouldn’t buy bitcoin itself”, and short sell bitcoin “with relative ease” says Bloomberg’s Rob Urban. Institutional investors will now be able to bet on bitcoin’s volatility. CFTC chairman Christopher Giancarlo said the regulator “has limited statutory authority” over cryptocurrency markets. The market is expected to remain largely unregulated.
As interest rates remain continually low, investors are turning towards riskier assets and with bitcoin’s astronomical return of almost 1500% since the beginning of the year. Bitcoin’s price has increased hugely since the announcement. However, many big names in finance maintain that the cryptocurrency is in a bubble and should be avoided as an investment.
Cantor Fitzgerald is creating a bitcoin binary option that will trade on its Cantor Exchange. The company said they too will cooperate with the regulator.