Articles tagged by Cryptocurrencies
The US Commodity Futures Trading Commission (CFTC) has issued an order granting LedgerX, an institutional trading and clearing platform for digital currencies, registration as a derivatives clearing organisation under the Commodity Exchange Act (CEA).
LedgerX will be the first US federally regulated exchange and clearing house for derivatives contracts settling in digital currencies.
Under the order, LedgerX will be authorised to provide clearing services for fully collateralised digital currency swaps. LedgerX, which was also granted an order of registration as a Swap Execution Facility (SEF) on July 6, 2017, initially plans to clear bitcoin options.
The bitcoin blockchain has officially forked, meaning that a subset of bitcoin miners have started to operate a different software to create a new blockchain, but one that shares a transaction history with bitcoin.
This means that where once there was just bitcoin, a single, decentralised digital currency, now there will also be “bitcoin cash”, which shares the same historical blockchain as the original bitcoin but will now diverge from it.
This fork in the original bitcoin blockchain to create this new version of the digital currency is the result of a long-running dispute about how the blockchain should operate, which Profit & Loss has previously covered.
CBOE Holdings has agreed a deal with Gemini Trust Company, which will see the exchange group receive an exclusive global license to use Gemini's bitcoin market data for bitcoin derivatives and indices.
Gemini is a digital asset exchange and custodian that allows customers to buy, sell and store digital assets such as bitcoin and ether. Gemini is a New York trust company that is subject to fiduciary obligations, capital reserve requirements and banking compliance standards of the New York State Department of Financial Services (DFS).
Profit & Loss talks to John Deters, chief strategy officer and head of multi-asset solutions at CBOE, about the potential for cryptocurrencies such as bitcoin to trade on regulated exchange platforms.
Profit & Loss: You recently announced a deal with Gemini to use its bitcoin market data to develop your own bitcoin derivatives and indices. What was the thinking behind this deal?
John Deters: We’ve been observing the evolution of the cryptocurrency space, and of bitcoin specifically, for some time. In parallel with that, we’ve been thinking about what sort of structures might work well for these products.
Digital currency exchange, Coinbase, has raised $100 million in Series D funding.
The round was led by IVP, with participation from Spark Capital, Greylock Partners, Battery Ventures, Section 32 and Draper Associates. Founded in 1980, IVP has invested in more than 300 companies, 106 of which have gone public. Notable IVP investments include companies such as Dropbox, Netflix, Twitter, Slack and Snap.
“Coinbase experienced unprecedented growth over the last year, and we have now exchanged over $25 billion of digital currency for our customers. We’ll be using this new funding to continue scaling even further,” says Brian Armstrong, co-founder and CEO of Coinbase, in a blog announcing the news.
As P&L’s resident cryptocurrency enthusiast I'm excited by some of the developments that have occurred in this space over the past few months, because it could signal the start of these digital assets moving towards the financial mainstream.
To help explain why I think this is such an interesting time in the cryptocurrency space, I explain how I first became interested in them after joining Profit & Loss, that I refused to buy bitcoin when it was at $1,000 because "it will never go higher than this" (it's now at $4,300) and why recent regulatory developments could have significant implications for financial services firms looking at trading cryptocurrencies.
Abu Dhabi-based ADS Securities announces the introduction of bitcoin CFD trading for Middle East and North Africa (MENA) clients using its MT4 platform.
Speaking about the decision to introduce cryptocurrency at this time, Jason Hughes, global head of retail sales, says: “We will be the first brokerage in the MENA region to offer bitcoin trading. We have followed the growth of this very exciting and dynamic new trading asset, but before offering a service we wanted to really understand the market and make sure we have the right systems and protection in place for our clients.
“As with all trading, it is very important to have the financial strength and the IT processes to protect positions. ADS Securities is the right partner for clients looking to trade cryptocurrencies. They understand that our capital reserves, regulation through the UAE Central Bank and the quality of the team provides a different level of support to them,” he adds.
More than 500 are already registered for Profit & Loss Forex Network Chicago, the biggest two-day FX conference in the industry. It's happening next week, so make your plans now to head to Chicago for the premier international FX event of the year.
Both days in Chicago are jam-packed with top experts from around the globe, ready to share with you their knowledge and insights.
Day 1 features Think-Tank sessions where you dive in and get involved in solving a critical FX issue of your choice. Then on Day 2, the speakers link the findings from these sessions in their discussions.
At the very start of June, Profit & Loss published an article looking at why demand for cryptocurrencies had spiked in 2017, with the price of bitcoin rising over 200% between January and the latter end of May.
Subsequent to that, demand continued to grow, with the price of bitcoin reaching $4,950 by the start of September. Meanwhile ether – the native cryptocurrency of the Ethereum network – went from $8.29 at the start of the year to $388 by September.
Despite a growing desire from some mainstream regulated financial services firms to trade bitcoin and other cryptocurrencies that are based off a public blockchain, there doesn’t seem to be many solutions on the horizon for the Know Your Customer (KYC) challenges this presents.
At the Sibos conference being held in Toronto this week, Elisabeth Rochman, financial services chief technologist at Hewlett Packard Enterprise, noted that a lot of the “BigTech” firms – such as Google and Facebook – are behind the curve compared to banks when it comes to looking at use cases for blockchain.
In a new survey conducted by BarclayHedge, two thirds of the hedge fund respondents said that are not planning to invest in cryptocurrencies, despite the current hype around these digital assets.
The survey of 119 hedge fund managers and CTAs was conducted between September 11 and September 29, 2017.
Managers were asked if they currently invest in or plan to invest in cryptocurrencies. In total, 68% answered “No,” while 24% responded that they either currently invest or plan to invest within the next six months. A further 8% replied, “We’re studying the situation.”
R3 and 22 of its member banks have developed a new international payments solution that leverages distributed ledger technology (DLT).
A protoype of the solution – which is being built on R3’s Corda platform – is due to be released by the end of 2017.
In a release issued today, R3 notes that domestic payment systems have advanced in many countries to the point of providing real-time funds transfer for customers, highlighting by contrast the extremely inefficient, expensive and slow experience businesses encounter with international payments.
CME Group plans to launch bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods.
The new contract will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR), which serves as a once-a-day reference rate of the US dollar price of bitcoin.
Bitcoin futures will be listed on and subject to the rules of CME.
"Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract," says Terry Duffy, CME group chairman and CEO. "As the world's largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities."
The latest P&L Survey is online ahead of our Asian conference swing starting Thursday November 9 in Singapore, through Tuesday November 14 in Hong Kong, ending in Shanghai on Thursday November 16.
To accompany our conference agenda, we have published a short survey for readers to complete – the questions have both a global and regional relevance ranging from liquidity conditions, through execution, to clearing and cryptocurrencies.
Profit & Loss talks to Tim McCourt, managing director and global head of equity products at CME, about why the Chicago exchange is planning to launch bitcoin futures before the end of the year.
Profit & Loss: So why has the CME decided to launch bitcoin futures?
Tim McCourt: We’re launching this futures contract off the back of customer demand. But a key thing for us is that this product isn’t necessarily something that’s new to the CME. We launched the Bitcoin Reference Rate a year ago, and so it makes very good sense – given the feedback and response that we’ve had from customers – that now is the right time to introduce a cash settled futures contract based on this index that tracks the bitcoin reference rate.
The UK’s Financial Conduct Authority (FCA) has issued two warnings to retail investors over binary options and cryptocurrency contracts for difference (CFDs).
On binary options, the FCA says it has concerns about the products – namely its data suggest that a majority of consumers lose money when trading binary options. “To make a profit, a consumer is likely to need both a sophisticated knowledge of financial markets and to ‘beat the odds’, which is always difficult to do,” the FCA says.
Nasdaq is planning to launch bitcoin futures next year.
This news comes as the value of bitcoin has been skyrocketing, reaching $10,000 per bitcoin yesterday, but rising to over $11,000 today, before falling back to under $10,000. At the start of 2017, bitcoin was valued at around $1,000.
It also comes after announcements from other major exchanges – CBOE and CME Group – that they are planning to list bitcoin futures before the end of this year.
Profit & Loss understands that one way in which Nasdaq plans to differentiate its bitcoin futures contract is by basing the product on an index that uses pricing sources from more than 50 exchanges worldwide.
Two exchange groups, CME Group and CBoE, have self-certified new contracts for Bitcoin futures products ahead of a full trading launch.
CME Group has self-certified the initial listing of its bitcoin futures contract to launch Monday, December 18, 2017, while CBoE says its own launch date will be announced "shortly".
The announcements were noted in a release by the US Commodity Futures Trading Commission (CFTC), which says its staff have held "rigorous" discussions with CME over the course of six weeks, and CBoE over the course of four months.
CBOE Global Markets (CBOE) has issued a release hailing the first day of trading on its new and highly anticipated bitcoin futures contract as a successful launch.
“XBT futures posted a strong start in the global trading hours, which began as planned at 5:00 pm CT on Sunday, December 10, 2017,” says CBOE in the release.
The first full day of trading continues today, December 11. At 5:00 pm CT on Sunday, XBT futures opened at $15,000 and 890 contracts were traded by 7:15 pm CT.
The Commodity Futures Trading Commission (CFTC) has released a proposed interpretation concerning its authority over retail commodity transactions involving virtual currency, such as bitcoin.
Specifically, the proposed interpretation sets out the CFTC’s view regarding the “actual delivery” exception that may apply to virtual currency transactions. It establishes two primary factors necessary to demonstrate “actual delivery” of retail commodity transactions in virtual currency:
The proposed interpretation establishes two primary factors necessary to demonstrate “actual delivery” of retail commodity transactions in virtual currency.
CME bitcoin cash-settled futures contracts began trading on Sunday under the ticker “BTC”.
The opening price for the January contract was $20,650, more than $1,150 over the last price on CME’s reference rate. However, by midday Monday the price had fallen to $18,920 and by 5pm EST the contract was trading at $19,500. The bitcoin spot market was at $18,700 at the same point in time.
In total, data from the CME showed that 1,088 bitcoin futures contracts had traded by 5pm EST Monday.
US Commodity Futures Trading Commission chairman Christopher Giancarlo has welcomed an announcement from the Commission’s Market Risk Advisory Committee that it will hold a public meeting on January 31, 2018 to discuss the statutory and regulatory process for the listing of new and novel products on CFTC-regulated designated contract markets and swap execution facilities through self-certification.
At the meeting, which is sponsored by CFTC Commissioner Rostnin Benham, CFTC staff from a variety of operating divisions will provide an overview of the current self-certification process and CFTC authorities and responsibilities related to the oversight, surveillance, and monitoring of listed derivatives products within CFTC jurisdiction.
Redline Trading Solutions is now supporting bitcoin futures trading on the CME and CBOE platforms.
Customers who wish to take advantage of the new Bitcoin futures contracts from CME and CBOE Futures Exchange (CFE) can now receive market data and trading access via Redline.
Redline’s solution is available as a fully managed platform or standalone software and the firm says that it is designed to be flexible in order to meet a variety of deployment configurations.
“There is strong interest in cryptocurrencies coming from hedge funds and proprietary trading firms,” says Mark Skalabrin, CEO. “They see the addition of futures at CME and CFE as a significant milestone in the market and are looking to Redline to provide exceptional technology services to address their needs.”
The price of bitcoin has dropped significantly following new reports that authorities in South Korea might ban the trading of cryptocurrency exchanges.
As mainstream news outlets started reporting on comments made by the South Korean Minister of Justice, Park Sang-Ki, that a bill is being prepared to ban the trading of cryptocurrencies, the price of bitcoin fell from $14,932 at 12:04am BST on January 11 to $12,884 by 4:20am BST, according to data from CoinDesk.
At the time of writing, 5:55pm BST, the price has recovered to $13,746, which is still a 7.5% decline in the overall value compared to this earlier high.
Cboe Global Markets (Cboe) announced the settlement of January expiry Cboe bitcoin (XBT) futures.
The settlement price was $10,900.00, as determined by the 4:00 p.m. ET Gemini1 Exchange bitcoin auction.
Cboe XBT futures, launched on December 10, 2017, and a total of over 124,000 contracts have traded across expiries since, representing a notional value of over $1.5 billion. The contracts, which are cash-settled, were specifically designed to allow participants to implement straightforward trading strategies through settlement to a single, tradable auction price as calculated by Gemini.