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UK Crypto Exchange Will Launch First ‘Physically Delivered’ Bitcoin Futures Next Month

UK-based cryptocurrency exchange Coinfloor will launch the world’s first “physically delivered” Bitcoin futures contracts in April 2018, an executive told Reuters March 14.

Speaking to Reuters during the Futures Industry Association’s annual conference in Florida, Coinfloor’s co-founder Mark Lamb announced that the exchange would shortly unveil a dedicated futures exchange called CoinfloorEX, which would showcase the pioneering product.

The exchange confirmed the news on Twitter Thursday, March 15.

“Physically delivered” Bitcoin futures contracts differ from those currently on offer from US platforms CBOE and CME Group in that they will deliver the underlying asset, BTC, upon the futures’ specified delivery date, whereas according to the current model, investors receive dividends in fiat.

This, Lamb says, eradicates security concerns from some sources about cash-settled contracts, which could become subject to price manipulation. He told Reuters:

“When you talk to the liquidity providers, they all say the same thing, which is they want a physically delivered futures contract so they can hedge their exposure across exchanges.”

Despite criticism from some commentators over investors seeing underwhelming returns from futures contracts so far, in an interview with Cointelegraph this week, CBOE director for product development Dennis O’Callahan said the company was trading almost 7000 of them daily.

“We have seen a lot of interest, especially retail interest, by some retail firms,” O’Callahan said about continued appetite for cash-settled contracts. “We like what we have done, and we are pleased with the progress the product has made.”

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UK Crypto Exchange to Launch Bitcoin Futures Contracts

A British cryptocurrency exchange is planning to enter the bitcoin futures market.

CoinfloorEX, a London-based exchange founded in 2013, announced Wednesday that it would launch bitcoin futures contracts next month, joining a number of other companies to offer such product to their customers, according to Reuters.

Notably, unlike some of its competitors, Coinfloor will offer physically settled futures contracts, the wire service reported, meaning when the contract is set to expire, the actual asset being traded will be delivered (in this case, bitcoin). The bitcoin futures contracts offered by CME and Cboe are cash settled, and do not deliver bitcoin to the contract’s owners.

The product came in response in part because of demand from some of the exchange’s customers, Coinfloor co-founder Mark Lamb told Reuters. He explained:

“When you talk to the liquidity providers, they all say the same thing, which is they want a physically delivered futures contract so they can hedge their exposure across exchanges.”

Stepping back, Coinfloor is at least the fifth company to offer bitcoin futures contracts, joining Bitmex, CryptoFacilities, CME Group and the CBOE. The U.S.-based CME and Cboe offer cash-settled contracts, as does the UK-based CryptoFacilities.

The concept of bitcoin futures is still controversial, with the U.S. Commodity Futures Trading Commission announcing it would work on a “heightened review process” for any further futures contracts after receiving pushback on the existing products.

Similarly, several senators requested further information about the CFTC’s oversight of such products, noting that taxpayers should be protected from “fraud, manipulation and abusive practices in the futures and options markets.”

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.