The CFTC has granted Bitnomial Exchange the approval to operate a Bitcoin futures and options exchange in the U.S. as a designated contracts market (DCM).
April 21, 2020 | AtoZ Markets – The small world of Bitcoin futures in the United States now has a new addition with the Commodity Futures Trading Commission (CFTC) approval for Bitnomial exchange. Bitnomial exchange can now operate as a designated contracts market, i.e. to offer Bitcoin futures and options contracts.
Only six exchanges offering Bitcoin futures
Before Bitnomial exchange approval, only 5 firms in the country could provide Bitcoin futures and option contract services. They are CME, Cboe, Bakkt, ErisX, and LedgerX. However, Cboe contract ended in 2019, as ErisX sees the only little volume on its futures. Bitnomial Exchange appears to concentrate on physically-settled contracts. For example, clients can get the actual Bitcoin when the contract expires, but not the equivalent in fiat.
Reportedly, before CFTC approved Bitnomial, there was an onsite technical evaluation of the operation of the exchanges. Bitnomial in the same light said it was the “first and only startup exchange” to get approval to offer both margined and physically delivered bitcoin futures and options contracts in the US”.
Related: CFTC Approves Tassat to Issue Bitcoin Derivative
CFTC approval for Bitnomial may be a boost for Bitcoin futures
“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 $45 [billion] but maybe illegal for many US traders,” it said in a press release.
The report stated further that Bitnomial exchange looks forward to getting new clients for new growth areas. It also added that the existing legacy firms have been finding it difficult tap into this base.
The new exchange has started setting up users’ acceptance settings scheduled to start April 27th. It has also begun user sign up. Luke Hoersten, the founder and CEO of Bitnomial exchange in a statement, said that the firm would begin quarterly futures, micro futures, and options. Contracts trade on 37% margin and will settle on-chain rather than a book entry.
Peter Johnson, from Jump Capital, said that physically-settled bitcoin futures contracts are “still largely inaccessible” to much of the US market. According to the SEC, Bitnomial raised over $7 mln in an equity funding from 12 investors in December 2019.
Will CFTC approval for Bitnomial may be a boost for Bitcoin futures? Let us know your thoughts in the comment below.