CFTC Greenlights Bitnomial to Offer Bitcoin (BTC) Derivatives

Bitnomial Exchange, a Chicago-based Bitcoin derivatives platform, recently gained approval from the U.S. Commodities Futures Trading Commission (CFTC) to offer traders physically-delivered bitcoin derivatives contracts and options trading.

Bitnomial Set to Roll Out Bitcoin Derivatives

The bitcoin derivatives exchange announced the approval via a press release on Monday (April 20, 2020). With the nod from the CFTC, Bitnomial can now function as a designated contract market (DCM) in the U.S. The company also said that it was the first exchange to launch a “margined and physically delivered Bitcoin futures and options” in the country.

Although not the first to venture into the world of BTC derivatives, Bitnomial believes that it can be a game-changer. According to the exchange platform:

“The approval allows Bitnomial to tackle a confluence of generational shifts in financial markets: First, a new generation of customers are emerging as savvy with trading, technology, and delivery. Second, innovative new unregulated derivatives are booming with daily volumes topping $45B but may be illegal for many US traders. “

Furthermore, the platform stated that the existing futures market has been unable to tap into “new growth areas”, which it believes it can open to U.S. customers. The recent development is in line with Bitnomial’s objective to make the bitcoin derivatives market easily accessible while also bridging the gap between the nascent industry and the mainstream financial market.

Luke Hoersten, the CEO and Founder of Bitnomial stated that the company will begin by trading three bitcoin derivatives products quarterly, namely BTC futures, BTC micro futures, and options, which will at first trade on 37% margin and will settle on-chain as opposed to book entry.

Peter Johnson of Jump Capital, one of the exchange’s investors also said the Chicago exchange is making bitcoin derivatives accessible to more U.S. customers, thereby exposing traders to bitcoin in a regulated and safe manner.

Bitnomial is organizing a User Acceptance Testing to commence on April 27, 2020, and U.S. customers can partake in the testing by signing up on the company’s website.

Crypto Derivatives Market Continues to Expand

The bitcoin derivatives market, though small, is gradually seeing new entrants into the sector. Bitnomial is the latest exchange platform to venture into the market. LedgerX, a BTC derivatives platform, and clearinghouse, back in June 2019 gained approval from the CFTC to operate as a DCM and offer physically-settled BTC futures contracts.

As reported by BTCManager in September 2019, the institutional derivatives platform, Bakkt, also launched its much-awaited bitcoin futures contract. The company later announced the launch of cash-settled BTC futures in Singapore.

ErisX, a crypto exchange platform, also obtained derivatives clearing organization (DCO) license from the CFTC, which will enable the digital currency exchange to offer virtual assets futures contracts. The Chicago Board Options Exchange (CBOE), who was among the few platforms offering a BTC derivatives contract, suspended its bitcoin futures contracts early in 2019 due to weak trading volume.