U.S. regulator to allow bitcoin futures trading for the first time

U.S. regulator to allow bitcoin futures trading for the first time

The announcement by the Commodity Futures Trading Commission (CFTC) paves the way for CME and CBOE to become the first traditional USA regulated exchanges to launch trading in bitcoin-related financial contracts, in a watershed moment for the cryptocurrency that should lead to greater regulatory scrutiny.

A United States federal regulator on Friday gave the go ahead to the CME Group Inc to start trading bitcoin futures later this month, the first time the digital currency is to be traded on a Wall Street exchange and subject to federal oversight. The impending launch date of Cboe bitcoin futures, which will trade on CFE under the ticker symbol 'XBT, ' will be announced shortly.

NASDAQ president and chief executive officer Adena Friedman tamped down news reports that her exchange is planning to launch bitcoin futures trading next year.

CME contracts require initial margin of 35 per cent, though that may be ramped up for end users as futures commission merchants add an additional margin layer.

While CBOE is now under regulatory approval and review, CME has set to launch its bitcoin futures in less than three weeks on Monday, December 18, 2017. The CME is also addressing margining, at the request of CFTC staff.

Futures contracts give traders a way to bet on bitcoin prices and earn profits without buying the actual cryptocurrency.

Cboe Global Markets Inc. will also be dealing with the cryptocurrency, but hasn't said when it will start.

Following the news of the bitcoin futures, the online currency is up in price.

"I think it is going to enable finally the approval of bitcoin ETFs, and other digital currency ETFs, which is game changing", Barry Silbert, founder and CEO of Digital Currency Group, told CNBC. While the regulator fears market manipulation by market participants in the cash bitcoin market, crypto enthusiasts are fearful of the government and traditional Wall Street taking over the asset class.

Bitcoin has gained more mainstream attention lately as its price has soared on the private exchanges.

It was trading on Friday at about US$10,500, after being worth about US$1,000 at the beginning of the year.