First it was LedgerX, now it is the CBOE.
In news out yesterday, it was revealed that the CBOE plans on launching Bitcoin Futures Products.
This would mark the second major derivatives market set to be unveiled in late 2017 or early 2018.
LedgerX got regulatory approval to launch the first ever regulated Bitcoin options market just a few weeks back.
More about that can be read here:
Then yesterday it was revealed that pending review by the U.S. Commodity Futures Trading Commission, the CBOE Futures Exchange plans to offer cash-settled bitcoin futures in the fourth quarter of this year or in early 2018.
From none to 2 derivatives markets, just like that.
The Chief Strategy Officer at the CBOE had some encouraging things to say regarding their reasoning for doing this.
According to John Deters (chief strategy officer):
"We've really come to the conclusion recently that cryptocurrencies are here to stay."
Did you hear that naysayers?
Cryptocurrencies are here to stay!
According to Deters, bitcoin futures will be available to both institutional as well as retail investors.
If you are not familiar with what a "derivative" is exactly, it can be defined as:
"something that is based on another source."
In this situation it refers to:
"an arrangement or instrument, (such as a future, option, or warrant) whose value derives from and is dependent on the value of the underlying asset."
In this case the underlying asset would be Bitcoin.
But wait, there's more...
Possibly the biggest part of the news announcement yesterday was who they will be partnering with.
Two names that you likely have heard about quite a bit.
CBOE announced that they have entered into a multi year exclusive global licensing agreement with digital currency exchange Gemini Trust, allowing CBOE to use Gemini's market data to create bitcoin derivatives and indexes.
Who is Gemini you might ask?
Well the more important question might be who runs Gemini... and that would be none other than Cameron and Tyler Winklevoss.
That's right, the brothers that lost out on Facebook but have had their noses in Bitcoin ever since, (including their failed/delayed ETF launch), are looking like they have positioned themselves right near the top of the Bitcoin derivatives markets.
I wrote a little about their history and involvement with Bitcoin a few months back, it can be read here:
Enter Winklevoss twins.
Cameron Winklevoss had this to say specifically regarding the coming derivatives markets:
"We believe that derivatives are the logical next step in the evolution of the bitcoin market. In order for bitcoin to continue to grow, you need to incorporate it into the existing market system."
I couldn't agree more.
Derivatives markets will open up Bitcoin to a whole new world of investors, potential a lot of the institutional variety, which tend to have pretty deep pockets.
Stay informed my friends!
Follow me: @jrcornel