November 15, 2017
By David Dinkins - November 15, 2017 (cointelegraph.com)
Reuters reports that Man Group, a UK-based hedge fund, will be getting involved in Bitcoin trading if CME Group’s plans to open a regulated futures exchange are approved. According to Business Insider, Man Group is “one of the largest hedge funds in the world” and the fund’s website points out that they manage $103.5 bln in funds.
Even a fraction of $103.5 bln could make a big impact on the markets, but more important, Man Group’s announcement continues to solidify digital currency as being worth of Wall Street’s attention. Bitcoin in particular is finding more and more acceptance in traditional markets. Likewise, futures markets and hedge fund involvement create more on-ramps into the mainstream financial system and more ways for large but cautious investors to get involved.
Hedge funds are only open to accredited investors, that is, those whose net worth exceeds $1 mln. However, such funds have a much wider latitude to trade whatever types of assets or instruments it thinks would be profitable for its clients. Mutual funds, on the other hand, are open to regular retail investors but have greater restrictions as to how they can invest their funds.
The holy grail for retail investors would be an exchange traded fund, or ETF. A Bitcoin ETF would allow ordinary investors to easily gain exposure to Bitcoin by adding it to their brokerage or retirement accounts. Greater acceptance by Wall Street and greater liquidity on regulated futures markets, such as CME’s, will almost certainly usher in an ETF.
November 01, 2017
By Josiah Wilmoth - November 01, 2017 (www.cryptocoinsnews.com)
The bitcoin price achieved record highs for the third consecutive day, surpassing the $6,600 mark for the first time following CME Group’s announcement that it would list bitcoin futures on its derivatives exchange.
As CCN reported, CME Group — the world’s largest regulated derivatives exchange — announced on Tuesday that it plans to become the first licensed U.S. trading platform to launch bitcoin futures contracts. This news caught many people off guard because CME Group had stated as recently as last month that it did not plan to list bitcoin futures within the near future. Nevertheless, the exchange operator reversed that stance, citing high demand for institutional and commercial financial products that provide investors with exposure to bitcoin.
The bitcoin price had already achieved a new high-water mark on Sunday, crossing the $6,300 threshold, and the CME Group announcement provided bitcoin with the fuel it needed to continue to scale the charts. Shortly after the announcement, the bitcoin price spiked above $6,400, and it sustained that advance throughout the remainder of the day.
|Bitcoin Price Chart | Source: BitcoinWisdom|
Despite this rapid advance, the bitcoin price climbed even further on Tuesday, punching through $6,600 on U.S. bitcoin exchange Coinbase to reach a new all-time high of $6,619. This translates into a market cap of more than $110 billion, raising bitcoin’s dominant share of the total cryptocurrency market cap to just under 60%.
The official listing of CME Group’s bitcoin futures — slated to happen before the end of the year — will likely trigger another price rise, as well as a significant infusion of capital from Wall Street firms. Additionally, the existence of bitcoin futures contracts should enable the Securities and Exchange Commission (SEC) to begin reviewing applications for Bitcoin ETFs, exchange-traded funds that trade in bitcoin futures contracts. These Bitcoin ETFs will be available to retail investors, will introduce further liquidity to the ecosystem and many analysts expect that their launch will cause the bitcoin price to ratchet up even further, perhaps as high as $7,500 or $10,000 within the near future.
Of course, the bitcoin price’s rapid advance in response to the announcement indicates that, to some extent, these anticipated developments have already been priced in. Consequently, the bitcoin price could see a moderate correction if regulators take a hostile stance on either the futures contracts or ETFs that trade those contracts. However, Terry Duffy, chairman and chief executive officer of CME Group, stated that the exchange operator is working closely with regulators to bring these financial products to market, and he does not expect that regulations will inhibit the exchange from launching bitcoin futures.
Featured image from Shutterstock.
Posted by Josiah Wilmoth
Josiah is a former ancient and medieval literature teacher. He has been writing about cryptocurrency since 2014, and his work has been cited in Business Insider, NPR, and Yahoo! Finance. He lives in rural North Carolina with his wife and son. Email him directly at email@example.com.
October 27, 2017
By Joseph Young - Octover 27, 2017 (btcmanager.com)
At the Futures Industry Association annual conference held in Chicago over October 17-19, US-based trading powerhouse DRW Holdings founder Don Wilson told reporters that the emergence of bitcoin derivatives and options trading platforms would inevitably lead to the approval of a bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC).
“Once a derivative is launched, a bitcoin ETF will follow. That’s the common wisdom.”
LedgerX Bitcoin Derivatives Platform Launched With Government Regulation
LedgerX, an institutional trading and clearing platform approved by the U.S. Commodity Futures Trading Commission (CFTC) to trade and clear swaps and options on digital currencies including bitcoin, successfully launched its bitcoin derivatives trading platform, clearing $1 million in orders within its first week.
In an official announcement, the LedgerX team admitted that the institution was expecting a “soft launch,” clearing minimal bitcoin derivatives and options trades for large-scale institutional investors and retail traders. The team further emphasized that it was planning on processing minimal volumes to test its platform and its infrastructure.
But, LedgerX ended up clearing over $1 million worth of swaps and options trades in its first week, which was unforeseen by the company and the cryptocurrency community. The LedgerX team said:
“As a new exchange and clearing house with technology built entirely from scratch, we were hoping for a quiet first week with minimal volumes to test the pipes. No press, no fanfare, just a laser-sharp focus on our customers, regulators and maybe we’d see a handful of small trades. Wow, were we mistaken — we ended up completing swaps and options trades worth over $1 million. Crucially, these trades were cleared through LedgerX, which is the only institutional grade, US federally regulated exchange and clearinghouse for digital currencies. And we are literally just getting started.”
Derivatives Trading Around Bitcoin Likely to Lead to ETF
As Wilson suggested, the probability of the emergence of bitcoin futures, options, and derivatives trading platforms leading to the approval of a bitcoin ETF is significantly high, because exchanges and clearing houses such as LedgerX are strictly regulated and overseen by financial regulators. All of its trades are protected, insured, and guaranteed, with regulatory oversight and trade surveillance.
“As a clearinghouse, we guarantee all the trades with the highest standard of oversight possible in partnership with the same US regulator that maintains the integrity of the foreign exchange, gold, and oil derivatives markets. There is no other platform in the world that can match the trade surveillance, regulatory oversight, and sophistication of financial instruments that we offer,” the LedgerX team explained.
Investor protection and trade surveillance of regulated platforms like LedgerX will play a vital factor in the approval process of bitcoin ETFs in the future. The SEC previously rejected the bitcoin ETF proposal of the Winklevoss twins in March due to lack of regulation in overseas markets and surveillance on trades.
Within the past seven months, major markets such as Japan and South Korea have significantly improved in terms of regulations. Specifically, the Japanese Financial Services Agency (FSA) imposed a national licensing program for cryptocurrency exchanges, recognizing digital currency trading platforms as regulated financial services providers.
Hence, the two major concerns of the SEC in regards to the approval of bitcoin ETFs that include lack of overseas markets and trade surveillance have already been resolved, increasing the probability of an approval for the cryptocurrency instrument in the upcoming months.