CFTC Gives Bitnomial A Go Ahead For Offering Physically-Settled Bitcoin Futures Contract

While the cryptocurrency markets have shown massive correction over the last month, the Bitcoin derivative products still continue to draw investors’ interest. On Monday, the U.S. Commodities and Futures Trading Commission (CFTC) gave Bitnomial Exchange an official approval to offer Bitcoin futures and options contracts.

Thus, Bitnomial becomes a new entrant in the Bitcoin futures market and joins several existing players like ICE’s Bakkt, CME, ErisX, CBOE, and LedgerX. Just like the Bakkt offering, the Bitnomial Exchange will focus on offering physically-settled Bitcoin futures contracts.

This means that upon contract expiry, the traders will get physical Bitcoins delivered in the accounts instead of any cash equivalent. As per the press release, the CFTC conducted an onsite technical evaluation of Bitnomial’s operations before giving a nod.

Bitnomial said that it was the “first and only startup exchange” to be approved for offering both - margined and physical delivered Bitcoin futures contracts in the U.S. The press release notes:

“The approval allows Bitnomial to tackle a confluence of generational shifts in financial markets: First, a new generation of customers are emerging as savvy with trading, technology, and delivery. Second, innovative new unregulated derivatives are booming with daily volumes topping $45B but may be illegal for many US traders”.

Bitnomial said that this approval will give them an opportunity to explore the “net growth areas”. It said that earlier it was finding some difficulty to explore a few zones.

Explaining its product features, Bitnomial Founder and CEO, Luke Hoersten, said: “We are building the Bitcoin Product Complex, a suite of interrelated financial products, starting with quarterly Bitcoin futures, micro futures, and options. Additionally, our products initially trade on 37% margin and are settled on-chain instead of book entry”.

Peter Johnson, who leads crypto investing for Jump Capital, said “Bitcoin derivatives are a fast- growing segment of the crypto market but physically settled Bitcoin derivatives are still largely inaccessible to most US traders. Bitnomial Exchange enables US traders to gain bitcoin exposure in a safe, regulatory compliant, and capital efficient manner. These products are also reliably tied to the underlying asset price via the option for physical delivery. We’re excited to be partners with a company that is committed to meeting the highest regulatory standards and increasing the accessibility of crypto derivatives to US traders.”