Although this month has seen a 33 percent decrease in Bitcoin price, Nasdaq is moving forward with plans to include Bitcoin futures products. Partnering with investment managing company VanEck, the products are set to roll out in the first quarter of 2019.
Plans to release many Bitcoin derivatives including a regulated crypto 2.0 futures-type contract were confirmed at the Consensus: Invest conference in Manhattan by Gabor Gurbacs, VanEck’s director of digital asset strategy.
Including Bitcoin derivatives in the second largest stock exchange in the world would be a positive influence on the regulatory environment. The Commodity Futures Trading Commission (CFTC) is involved to make sure products comply with any laws and concerns involved.
Thus far, Bitcoin has been regulated as a commodity by the CFTC, but two futures products have now been approved: one for the Chicago Mercantile Exchange (CME) and the other for the Chicago Board Options Exchange (CBOE).
Gurbacs “ran a few extra miles working with the CFTC to bring about new standards for custody and surveillance,” VanEck said. These are concerns the Security and Exchange Commission wish to address before allowing Bitcoin products on the market.
VanEck is also seeking approval for the first U.S. ETF from the Securities and Exchange Commission, while all others to date have failed. The SEC is adamant about securing investor protection from fraud and market manipulation before approving an ETF.
The two Nasdaq-approved Bitcoin futures contracts will be backed by and settled in cash upon expiration. Nasdaq’s rival, the New York Stock Exchange, has a subsidiary that will offer a physically-delivered Bitcoin futures product, however. This product, offered by Bakkt, is also expected to roll out in early 2019. When these contracts expire, they will be settled in Bitcoin rather than cash. There will likely be a market for both products because investors will undoubtedly have preferences, depending on many factors such as risk tolerance and institutional involvement.
The legitimacy of cryptocurrency in major markets should significantly improve with the introduction of these products. They will offer accessibility for those interested in crypto but unsure of the technicalities of crypto specific exchanges.