The Chicago-based market giants Chicago Board Options Exchange (Cboe) and the Chicago Market Exchange (CME) are exploring the potential of Ethereum, a cryptocurrency with a market share of $ 49.6 billion. of dollars. The problem was that until last week, uncertainty over US regulations prevented them from making a crucial decision about this virtual currency.
While Ethereum futures markets already exist in the United Kingdom, doubts about the US Securities and Exchange Commission's (SEC) decision about the legitimacy of this cryptocurrency worried these two exchanges, and others in the area.
Cboe and CME have both been trading in Bitcoin futures since last year, thanks to Bitcoin's classification as a full-fledged title. Knowing that the Ether, which was initially purchased by a small number of people, could be recognized as a title, many companies had developed related products, pending further decision by the SEC.
Then, last week, SEC Director William Hinman made fifteen short words that finally shed light on this doubt and plunged much of the cryptocurrency universe into panic: "The offers and current Ethers sales do not constitute securities transactions ".
The president of the Cboe, Chris Concannon, was in full flight when he heard the news. He has since told Forbes that the first thing he did next was to call his communications director to prepare for a barrage of solicitations from the media. The long-awaited moment had arrived, so it was time to act.
"We've been thinking about Ethereum futures for some time," says Chris Concannon in Forbes. Clearly, the potential of Ether to become a full-fledged title has gone, the way is now free to launch a futures market for Ethereum.
While the president of the Cboe has not publicly stated whether his exchange of $ 15.6 billion is actively preparing to launch a futures market, he explains that he wanted to establish such markets since he is interested in cryptocurrency.
In order to boost the process, the Cboe, the largest exchange of options and futures markets in the United States with 22.95% market share, formed an exclusive partnership last year with Gemini Trust Company based in New York and directed by Tyler and Cameron Winklevoss. Using information from Gemini's Bitcoin markets, Cboe launched the first futures contracts for Bitcoin (XBT) in the United States in December 2017 and has since traded 680,000 contracts for a notional value of 6.85 billion euros. dollars, according to company documents.
The reasons for the company's involvement with Bitcoin date back to a 2015 decision by the Commodity Futures Trading Commission (CFTC), which officially recognized cryptocurrency, which does not rely on financial authority, as well as all copies or branches of his code, as a title. But the Ethereum, which started in 2014 selling some of its virtual currency before its launch, remains in a fuzzy area, while some skeptics say that the currency is more centralized than others want to recognize it.
While this uncertainty prevents regulated US companies from offering futures markets, Cboe partner Gemini added the Ethereum to its platform in 2016 and has sold Ehtereum auctions daily since last July. The information from the sale could play an important role in determining the price of future futures that the Cboe could eventually launch, according to Chris Concannon.
In reality, it is the partnership between Cboe and Gemini that, according to the director of the exchange, could accelerate the supply of futures market if it were to see the day. Last month, in addition to Ethereum and Bitcoin, Gemini supported Zcash, Litecoin and Bitcoin cash, all of which are derivatives of Bitcoin.
"This partnership was designed to allow us to release additional products for other currencies while using the same structure," says Chris Concannon. We have nothing special to do, it only follows the footsteps of Bitcoins futures markets. "
A week after the launch of the first regulated futures markets for Bitcoin, CME has also embarked on a possible adoption of Ethereum futures markets
Unlike the Cboe, which quickly arrived on the market thanks to its partner Gemini, the CME created its own indices for Bitcoin in partnership with Crypto Facilities, based in the United Kingdom. The Bitcoin CME CF reference rate and the Bitcoin CME CF Real-Time Index, increasingly controversial indices, were launched in November 2016 and determined the price of Bitcoin based on data provided by participating exchanges.
A little over a year after putting the indexes in place, the CME started its own futures markets for Bitcoin (BTC), which are based on these indices. Over the past three months, BTC traded an average of 130 million per day, according to company data.
The international product manager for WEC told Forbes that the exchange has no plans to launch a futures market for Ethereum. Last month, however, CME announced that it had partnered with Crypto Facilities, the company that helped it with the Bitcoin futures, and launched an ether-dollar benchmark, as well as an index in time. real.
Launched in several phases, the index has become a large-scale product this month, and while the number of subscribers has not been revealed, the CME spokesperson explained to Forbes that the page home site for the Ethereum had been visited 5,200 times since it was online. McCourt explains that the CEM judges the interest of the index according to the market participants and could put a different place of services according to the demand.
"Just as Bitcoin futures markets have been put in place to meet the demand, so will all additional product developments, whether they relate to Ether or other tokens, crypto or digital assets" says McCourt.
Despite the fact that the CME has denied having plans to create Ethereum futures, a better overview of the collaboration between the exchange and Crypto Facilities provided some clues as to what "consumer demand" might look like.
Long before the CME launched its futures markets for Bitcoin, its partner, Crypto Facilities, began offering the contracts, and it continues to expand its range of services today. Founded in 2015, the London-based start-up is years ahead of the cryptocurrency world. Supervised by UK regulators, the Financial Conduct Authority (FAC), since October 2016, Crypto Facilities has started trading XRP markets, and last month, just a week before the CME revealed its ether index, Crypto Facilities launched the first regulated Ethereum futures market using these same indices.
Shortly after their launch, these Ethereum futures markets grew to one-tenth of the total value. The founder and CEO of the company, Timo Schlaefer, expects a trading volume of 150 million dollars for this semester alone. The monthly volumes of XRP are currently close to $ 125 million, compared to $ 30 million in February. The total volume of futures exchanges jumped 84% in the first half of 2018 compared to the last half of 2017, he added.
"We are seeing strong demand for reliable and trustworthy price levels for cryptocurrencies," says Timo Schlaefer.
But, of course, everything is not right for the world of cryptocurrency. Beyond growing concerns about the ability to sell Bitcoins exposed that contributed to Bitcoin's price drop from $ 19,000 last year to $ 6,400 today, a new wave of concern is emerging. in new manipulations even more malicious.
Last week, the CFTC requested data for several exchanges associated with the Bitcoin CME CF reference rate. Despite a number of safeguards put in place for the benchmark rate, including a volume-weighted median of data and case-specific data, concerns remained about the highly volatile nature of the exchange, knowing the data is a potential weak point of the system.
Last month, to address these concerns, Crypto Facilities recruited Sui Chung, the former Managing Director of Euromoney Institutional Investor, to oversee the industry around index and pricing. While acknowledging the surrounding concerns, Sui Chung detailed the process of weighting the cryptocurrency futures markets in an email to Forbes and affirmed his position: "We are still reviewing the adoption and liquidity levels of the tokens in order to understand if the market requires, and if we can determine, reliable and solid price levels. "
