Further futures to boost Bitcoin

People see Bitcoin as a store of value outside the system when monetary policy is fast and loose

People see Bitcoin as a store of value outside the system when monetary policy is fast and looseGETTY IMAGES

The Chicago Mercantile Exchange, a much larger exchange than the CBOE, will launch its Bitcoin futures on Sunday.

Competitor Cboe, which launched bitcoin futures December 10, will offer contracts as low as 1 bitcoin.

Short trading came to the company's trading platform on Wednesday, with $40,000 margin demanded for a single contract. And also that the biggest Bitcoin miners in the world are not only not based in the USA, they are also not built to trade financial instruments.

While suffering wild swings in value, bitcoin has gone up 15-fold since the beginning of the year. For context, Coinmarketcap.com lists bitcoin trading volumes at 19:08 UTC as $13.5 billion in just the last 24 hours. Because there is not enough liquidity, the volatility of bitcoin's spot markets is not being ameliorated in its futures contract pricing.

According to Tyler Durden from Zero Hedge, by requiring a margin of 100%, Goldman's clients may as well be trading the underlying as there is zero leverage on the associated futures position; effectively, the only benefit from doing such a trade is giving Goldman the "privilege" of holding the bitcoin and keeping it safe from hackers' prying hands. Only when the heavyweights such as JP Morgan Chase and Morgan Stanley allow their clients to trade crypto currency will things really heat up for institutional investors.

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"I think we're going through a major change in finance", Duffy said. "Miners" contribute computer power to package up and verify the transactions, thus putting them on the blockchain.

"Regulation is important to any product - when you look at cryptocurrencies or anything else you trade - so we continue to evolve", Duffy said on CNBC's "Fast Money".

"For us as a fully regulated exchange it is key to follow a sustainable approach on this asset class, in close coordination with the market and regulators". Options Clearing and CME raised their margin requirements amid wild price swings in the market. "We are hearing the familiar refrain, "this time is different".

According to Wirtschaftswoche, the futures contracts will be traded via Deutsche Börse's Eurex derivatives exchange.

The CFTC determined that "services, rights and interests in which contracts for future delivery are presently or in the future dealt with" are commodities, dragging virtual currencies into scope, which did not have "legal tender status in any jurisdiction". They're built to mine bitcoin.

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