Cboe halts Bitcoin Core futures contracts for an indeterminate time

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The Chicago Board Options Exchange (Cboe) has announced that it won’t list Bitcoin Core (BTC) futures contracts in March. The exchange has been listing BTC futures contracts since December 2017. It was the first major platform to do so before the Chicago Mercantile Exchange (CME) followed suit. 

In its statement, the Cboe didn’t give the reason for its sudden decision. However, it revealed that it would be re-assessing how it offers the product.

“CFE is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract for trading in March 2019. CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading. Currently listed XBT futures contracts remain available for trading.”

The currently listed futures, XBTM19, expire on June 19 later this year. They are still available for trading till then.

Future contracts were a significant factor in BTC’s rise in 2017, with many viewing them as an endorsement for the industry by institutional investors. They gave investors the opportunity to bet on the volatility of BTC without having to own the crypto. After an investor buys a futures contract, he gets to speculate on whether the price of the asset will have gone up or down upon expiration of the contract.

While Cboe was the pioneer, the volume of its BTC futures contracts has been largely underwhelming. In fact, in 2018, CME consistently outperformed Cboe in volume. 

https://twitter.com/JohnTodaro1/status/1106314621517025282

However, Cboe’s decision may not account for much should upcoming platforms, ErisX and Bakkt launch any time soon. For one, the two will offer real crypto to the buyers, and not fiat currencies.

Cboe currently settles the contracts in dollars. This means that for every two parties, the difference between the spot price and the futures price is settled in U.S dollars. Bakkt and ErisX will settle the difference in crypto.

Additionally, if the one or both platforms launch this year, it will give the green light to other interested parties to open such platforms. The regulatory hurdles that keep many at bay will have been smoothened out by Bakkt and ErisX.