Coinfloor, a UK based cryptocurrency exchange, is all set to enter the Bitcoin futures market. It made the official announcement on Wednesday, joining a select few companies to offer this product.
And more so, these will be the world’s first physically settled futures contracts. The British exchange, founded in 2013, has become the fifth provider of this service to its customers, following the likes of Bitmex, CryptoFacilities, CME Group and the CBOE.
According to this report, this launch came as a response to the demand from some of the exchange customers.
Mark Lamb, the cofounder of Coinfloor, is here with the details:
“When you talk to the liquidity providers, they all say the same thing, which is they want a physically delivered futures contract so they can hedge their exposure across exchanges.”
The notable thing here is that unlike some of its competitors, Coinfloor will offer physically settled futures contract. In other words, the actual asset being traded will be delivered when the contract is set to expire.
In this case Bitcoin.
As a comparison, the Bitcoin futures that CME and CBOE offers are settled in cash. And the same holds true for the UK based CryptoFacilities.
This development comes at a time when the US Commodity Futures Trading Commission is working on a heightened review process for any further future contracts. Although a number of companies offer Bitcoin futures, the concept is still seen as controversial.
That said, the two US based operators have found success with their offerings, and these physical settled affairs are sure to be a step up.
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