Ethereum Futures: The Next Big Derivative to Hit the Market?

Publicado en by Cointele | Publicado en

The United States Commodity Futures Trading Commission hasn't come to bury Ether, it's come to regulate it.

It may be too early to gauge when the first Ether futures product will go to market.

"Right now, we are focused on bringing options on CME bitcoin futures to market in Q1 2020.".

The exchanges believed if they built a Bitcoin futures product, the institutions would come, he said, but the response has been underwhelming.

"Institutional investors appear to have found more attractive investment alternatives elsewhere, and Ether futures aren't likely to fare any better. We are talking about Ether, the cryptocurrency, not Ethereum, the blockchain platform - which continues to attract interest from institutions."

Bitcoin futures contracts at CME averaged 5,534 contracts traded per day in the third quarter of 2019, up 10% from the same quarter in 2018, but down from the second quarter of 2019, the company told Cointelegraph, noting that institutional interest was building in the third quarter.

Futures are simply contracts to buy or sell a designated quantity of an asset at a specified price and date, and they are particularly useful when the underlying asset is volatile, which is the case with Bitcoin - and to a lesser degree with Ether, as David L. Yermack, professor at NYU Stern, noted to Cointelegraph.

Questions remain, however: Will futures trading lead to financial manipulation or the cornering of the market? Some worry that the government is relying on profit-seeking exchanges - rather than the CFTC, a government regulator - to self-certify new futures products, Indiana University professor Margaret Ryznar wrote.

Self-certification requires the exchange to prove that the new contract is not readily susceptible to manipulation, with Ryznar adding, "Futures generally contribute to systemic risk, but distinctive features of Bitcoin futures heighten concerns."

The Futures Industry Association has opined that Ether, more technically complex than Bitcoin because of its smart contract overlay, may be more difficult to risk manage.

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