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The second largest stock exchange in the world will launch its own bitcoin futures in the first half of 2019. This was told by the vice-president of the press service of Nasdaq, Joseph Kristinat, noting that at this stage the exchange is waiting for the decision of the Commodity Futures Trading Commission (CFTC).
According to Kristinat, CFTC has no reason to deny Nasdaq listing of derivative derivatives for Bitcoin , since the new exchange product meets all the requirements of the regulator. What are the key differences between Nasdaq contracts and those offered by CME and CBOE, and how will they affect the digital asset market?
Bitcoin 2.0 Futures Contracts
For the first time that the Nasdaq Stock Exchange is preparing to launch its own Bitcoin futures contracts, the Bloomberg publication reported citing two domestic sources. The November 27 article states that this initiative will be implemented through a partnership with the investment corporation VanEck Associates, which will be responsible for providing a bitcoin price index based on several exchanges.
During the panel discussion at the Consensus: Invest conference, VanEck's head of digital assets strategy Gabor Gurbach shared with the audience the plans of the two companies to launch “regulated cryptocurrency futures contracts 2.0”.
As noted by Gurbach, their goal is to provide Nasdaq customers with transparent, regulated and traceable products based on digital assets. To this end, VanEck actively worked with the CFTC to ensure that new products comply with all the requirements of the country's financial regulator. Thanks to this, the company was able to develop new standards for the storage and control of digital products.
In a separate interview CoinDesk Hurbo more detail told about the launch of a new product. Thus, the representative of VanEck proposes to consider the future futures contracts of a new type as an “upgrade” of the current regulatory standards intended to control the trade in derivative derivatives based on Bitcoin. The SMARTS control system developed by the Nasdaq exchange will be used to implement this initiative.
This system is based on many different algorithms that will monitor suspicious activity in the futures market, such as spoofing or dummy trading. Thus, SMARTS will act as a “big police engine” and will ensure fair and orderly trade, Gurbach explained.
Also, to launch new generation futures contracts, the MVIS index developed by VanEck will be used. Based on this index, the price of derivatives for digital assets will be formed.
Differences between bitcoin futures on CME, CBOE and Bakkt
Today, the CFTC has approved trading in two derivative derivatives based on Bitcoin: the first was launched by the Chicago Options Exchange (CBOE) and the Winkloss brothers Gemini cryptobirths, and the second by the Chicago Commodity Exchange (CME) and the Crypto Facilities cryptoheals. These products are calculated in Fiat, and therefore, when the CBOE and CME bitcoin futures expire, no “physical” crypto assets are paid to investors.
At the same time , the crypto market expects the launch of the Bakkt cryptocurrency trading platform, scheduled for January 24, 2019. This platform was developed by Intercontinental Exchange (ICE) – a network of stock exchanges and clearing houses for financial and commodity markets in the United States, Canada and Europe, which is also the world's largest futures market operator where all types of underlying assets are traded.
Unlike CME and CBOE, Bakkt clients will be able to trade bitcoin futures with a physical asset supply, which in turn will have a direct impact on the bitcoin rate , since the supply of cryptocurrency will increase the demand for it.
At the moment, it is unclear what type of contract will be the new Nasdaq product. However, according to Nasdaq Chief Executive Officer Adena Friedman, their futures contracts for Bitcoin will be guided by the spot price of Bitcoin obtained from a variety of exchanges. CME bitcoin derivatives use prices from four markets, while CBOE uses prices from just one.
The impact of bitcoin futures on the cryptocurrency market
Now the Nasdaq is waiting for a CFTC decision. However, Joseph Kristinat is confident that the commission will give a positive response and that Bitcoin futures trading will begin in the first half of 2019:
"A huge amount of work was carried out to ensure that everything meets the requirements of the regulator."
Moreover, as Kristinat emphasized, over the past five years, the Nasdaq team has been closely following the blockchain industry , and the current market downturn will not affect the company's plans to enter the digital assets market.
At the same time, Gabor Gurbah suggests that in 2019 new opportunities open up for the cryptocurrency market, in particular, due to the launch of Nasdaq bitcoin futures.
“We believe that 2018 was a year of regulation, and 2019 will be a year of implementation ,” Gurbakh stressed.
Thus, in addition to working on the bitcoin futures market Nasdaq, VanEck is also awaiting the final decision of the US Securities and Exchange Commission (SEC) regarding the launch of the first deliverable Bitcoin-ETF. This product is developed in conjunction with the company SolidX, which develops software and financial services based on the blockchain.
On Monday, November 26, representatives from VanEck, SolidX, and the CBOE exchange met with members of the SEC divisions in corporate finance, trade and markets, economic analysis and risk analysis, as well as with the office of the general adviser.
During the meeting, representatives of the interests of the crypto community paid special attention to the current state of the cryptographic market, stressing that this sector is already mature enough for Bitcoin ETF, and the new product is not much different from the existing tools for assets such as gold, silver and oil. Moreover, according to company representatives, the Bitcoin ecosystem is less subject to manipulation than the markets for other assets. Thus, insiders of traditional markets may possess and trade information related to the supply of real assets, thereby putting pressure on their price.
Also during the conversation, representatives of the companies reminded the Commission of the mathematics engine developed by the CBOE, as well as the VanEck MVIS index, which will help financial institutions to determine the price of bitcoin. The SEC should announce its decision on February 27, 2019.
