US Regulator Approves Bitcoin Futures Trading, ETFs may be next
Not long ago, the CME Group, which is the world’s biggest securities exchange, announced that they will soon start offering bitcoin futures, thus attracting institutional investments, and increasing the value of bitcoin. Shortly afterwards, the CBOE Global Markets also announced that they will begin offering the very same service later this month.
These two announcements helped drive the bitcoin price up, hence helping it break the $10,000 milestone, and reach an all-time high of over $11,400. Now, reports indicate that the US regulator responsible for futures and securities trading, announced that it will allow these two exchanges to begin trading bitcoin-based financial contracts.
The announcement comes from the Commodity Futures Trading Commission, also known as the CFTC. This means that now institutional and individual investors will be able to purchase and sell future contracts in bitcoin, which is basically an agreement to purchase the currency in a specified period of time, at a certain price.
As bitcoin is well-known for its volatility, the CME Group and CBOE Global Markets will both put strict safeguards in place, to help protect investors from losing substantial amounts of money in case of unexpected price volatility.
It is important to point out the fact that back in 2015, the CFTC mentioned that it will trade bitcoin as a commodity, rather than a digital currency. In a recent press statement, Adam White, of GDAX mentioned that: “But the IRS says it’s property, the SEC said now some digital currency is a security, and FinCEN says digital currency is a ‘money-like instrument.”
Given the fact that the CFTC approved bitcoin futures trading, many now believe that the digital currency is on the right path towards getting ETF trading approved as well. In the past, there have been several attempts made by a few exchanges to get approval on ETFs. In fact, not long ago, a SEC official mentioned that a strong bitcoin futures market may just make the regulator a bit more comfortable, and increase the chances of an ETF approval. The result of this would be an even higher increase of capital flowing in, hence leading to better prices, increased adoption and rising interest for the digital currency market.
Based on everything that has been outlined so far, the market is excited to see how bitcoin futures will play out once the CME Group begins offering this service, in the second week of December.