Cboe Says Bitcoin Futures Coming Dec. 10

Bitcoin futures are coming to market this month, first set to begin trading on Dec. 10 at Cboe Global Markets, the parent company of ETF.com, and later on Dec. 18 at the Chicago Mercantile Exchange.

The Chicago-based exchanges have been in a race to claim first-to-market status on bitcoin futures, and today Cboe said its contract, under the ticker ‘XBT,’ will begin trading Sunday, roughly a week ahead of its competitor across town.

The futures, which at Cboe will be cash-settled contracts based on bitcoin prices set by digital asset exchange Gemini, will initially be offered for free to promote this market, Ed Tilly, chairman and CEO of Cboe Global Markets, said in a release.

“Given the unprecedented interest in bitcoin, it's vital we provide clients the trading tools to help them express their views and hedge their exposure,” he said.

At the CME, bitcoin futures will be cash-settled based on the CME CF Bitcoin Reference Rate (BRR), a “once-a-day reference rate” of bitcoin price, according to the exchange.

Major Milestone

The launch of bitcoin derivatives on regulated exchanges is a major milestone for the digital currency that has taken the markets by storm this year. Bitcoin prices have soared from about $950 at the start of the year to just under $12,000 this week as investor interest increases.

According to Cboe data, the total value of all bitcoin outstanding—as in, the market capitalization of bitcoin—has grown from less than $1 billion to over $183 billion in the past five years. Daily notional turnover is over $10 billion.

Heightened Demand

The futures contracts are largely expected to fuel even more demand from institutional players, and offer investors the opportunity to short bitcoin effectively for the first time.

From an ETF perspective, the U.S. Commodity Futures Trading Commission’s move to allow bitcoin futures to trade could pave the way for the Securities and Exchange Commission to rethink its stance on bitcoin ETFs.

Earlier this year, the SEC rejected a pair of bitcoin ETFs, citing a lack of regulation in the bitcoin market.

A few ETF issuers put in registration this year futures-based bitcoin ETFs only to pull the plug on them at the request of regulators, who asked they wait for the actual launch of bitcoin futures trading.

But the race to introduce bitcoin in an ETF wrapper is on with issuers, and we will likely see a wave of new and updated filings from would-be bitcoin ETF issuers in the coming weeks.

Just Getting Rolling

And it probably won't stop with bitcoin: VanEck, which was one of the firms to withdraw its filing for a bitcoin ETF, earlier this month introduced a series of indices covering at least a dozen cryptocurrencies.

Rex ETFs and ProShares also have been planning to enter the bitcoin ETF space.

Contact Cinthia Murphy at [email protected]