US regulator to allow bitcoin futures trading for the first time
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Updated: The U.S. Commodity Futures Trading Commission will allow futures trading of bitcoin.
In a press release issued Friday, the derivatives regulator cleared the way for the Chicago Mercantile Exchange and the CBOE Futures Exchange to be the first traditional exchanges to trade in bitcoin-related financial contracts.
“Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,” Chairman J. Christopher Giancarlo said in the release. On account of the unique challenges bitcoin creates, he added that the exchanges “have agreed to significant enhancements to protect customers and maintain orderly markets.”
This is the first time a cryptocurrency has been approved for trading by the CFTC, according to Reuters. However, the commission’s press release cautioned that the act “does not constitute a Commission endorsement of the use or value of virtual currency products or derivatives.”
Earlier this week, the virtual asset broke the $10,000 mark for the first time and climbed to an all-time high of $11,395 before dropping 20 percent, according to the Luxembourg-based exchange Bitstamp.
The CFTC’s announcement helped the cryptocurrency’s value rebound from less than $9,500 to over $10,500, a gain of 5 percent on the day.
After the new contracts launch, the CFTC will undertake “a variety of risk-monitoring activities,” like “monitoring and analyzing the size and development of the market, positions and changes in positions over time, open interest, initial margin requirements, and variation margin payments, as well as stress testing positions.”
The Chicago Mercantile Exchange said in a release that it will start listing bitcoin futures on Dec.18. CBOE will start trading on Dec. 10.
Story updated on Dec. 4 to reflect date when CBOE will begin futures trading of bitcoin.
