Category Archives: Coinfloor

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German Derivatives Exchange Supposedly Considering Crypto Futures Contracts

German Derivatives Exchange Eurex May Launch Crypto Futures Contracts

German-operated derivatives market Eurex is rumored to soon turn on the futures contract faucet, releasing its own set of cryptocurrency derivative contracts. If true, the first wave of contracts will include Bitcoin, Ethereum and Ripple (XRP) coin future contracts.

Citing people familiar with the development, media outlet The Block Crypto said that the exchange is meeting with market making experts with regards to the product.

Though no official comments have been made by the firm, the move, if true, comes as no surprise seeing how it had set its target on the crypto market since 2017. In 2018, a division was set up for crypto assets and distributed ledger technology. During that period, a Deutsche Börse spokesperson reportedly told German-based news media:

“We are thinking about futures, with which private investors and institutional investors can protect existing investments in bitcoin or set for falling prices of the cyber currency.”

More so, while Deutsche Börse acknowledged the fact that they have been in touch with the space for a while now, it had only been in the “ideation and exploration” phase but will need a “centrally steered approach” for a full-scale expression of the technology in their business.

The future of the crypto derivative market continues to take shape as new players are being introduced joining others in the queue for regulatory approval. Bakkt, Seed CX, and ErisX are among those seeking to introduce new settlement types into the US market – the physical Bitcoin settlements – adding variety to already established market place for crypto futures contract offered by pioneers CBOE and CME.

CBOE also wants to launch an Ethereum futures contract and is only waiting for the approval from the regulatory watchdog. So far, net sentiments from the idea of an Ethereum futures contract have been somewhat positive.

A couple of other cryptocurrency exchanges such as BitMex, CoinFloor, and Binance are already marking their space in the advanced cryptocurrency market to suit sophisticated investors. As the industry continues to mature, perhaps the market will take a complete semblance to that of the traditional financial market and may appeal to more mainstream traders and investors. Although regulation may be pivotal to this development, the CFTC has a workaround on how to allow the exchanges self-regulate in line with the stipulated financial laws, as an interim approach before a more constituted legal infrastructure is in place.

Moreover, the major contention lies in the security of services provided – the custody infrastructure and market monitoring instruments – constituting major impediments to the launch of other derivate market classes like the Bitcoin ETF, which has had many of its proposals declined or for many months under review by the Securities and Exchange Commission (SEC).

Nonetheless, it behooves any financial service operator willing to engage in this emerging market class to do a proper groundwork before launching any product into the market. As there are currently a few products, yet only a handful of institutional investors have dipped a foot in the water, although this number may be increasing steadily, still it only proves that a more comprehensive market infrastructure may be the only key to unlock the market for a full-scale adoption by institutions.

 

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Coinfloor to Launch Derivative Crypto Futures Amid Tough Market

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Top UK cryptocurrency exchange Coinfloor has told Bloomberg, that it is venturing into the derivatives market despite the seemingly poor market outlook and fierce competition in the futures market, with physically-delivered Bitcoin futures the new emerging derivatives for the asset class.

The CoinfloorEX spinoff of the Coinfloor cryptocurrency exchange will be offering the new physical Bitcoin futures services to sophisticated Asian traders. Meanwhile, it has been renamed to Coin Futures and Lending Exchange (CoinFLEX) for this purpose.

According to the CEO of CoinFLEX Mark Lamb, who is also a co-founder of Coinfloor, “bear cycles in crypto can go on a long time, but ultimately it’s an asset class which is one of the most fascinating, volatile, which is great for traders”. Lamb also downplayed the current market condition, confident that crypto will someday become globally accepted, saying that “it has the potential to be one of the major currencies in the world”.

CoinFLEX will have its base in Hong Kong. The proposed derivatives will include physical futures for Bitcoin, Bitcoin Cash, and Ethereum with leveraging of up to 20 times. Comparatively, top cryptocurrency exchange BitMex, also having a sizeable market in Hong Kong, will be a competitor as it also offers leverage of up to 100 times on some of its contracts. However, CoinFLEX has the advantage of physical delivery as against cash settlements that are prone to manipulation.

Prominent crypto movers have been named as members of a consortium owning the project, including Roger Ver, Mike Komaransky and Trading Technologies International Inc. Meanwhile, Coinfloor is also reported to be retaining an equity stake in the new venture.

It would seem that the market for institutional investors is constantly being expanded with multiple derivative options. “Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery,” said Lamb.

Last year, talks about the proposed Bakkt platform – an Intercontinental Exchange (ICE) project – constantly drove up the expectations of cryptocurrency holders and investors. Its recent announcement included a successful seed round funding of over USD 182 million, and a scheduled launch early this year, however, the date “will be amended pursuant to the CFTC’s process and timeline”.

Another derivative platform, ErisX, recently reeled in USD 27.5 million from Fidelity Investments, Nasdaq Ventures, and other investors during a seed funding round. It is also waiting for approval from financial regulators before launching this year.

Recently, the Japanese financial regulator hinted on the possibility of the launch of exchange-traded funds (ETF) that will be based on the new asset class.

 

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Crypto on the Rock: Gibraltar Gets Its First Regulated Exchange

The tiny British Overseas Territory of Gibraltar located at the southern tip of the Iberian Peninsula is to get its first fully licensed exchange, Coinfloor.

Coinfloor, the UK’s oldest crypto exchange is the first to be fully accredited as a “distributed ledger technology (DLT) provider” under the legislation which requires the government to satisfy itself that 9 operating principles of good practice are being adhered to.

Obi Nwosu, the CEO of Coinfloor, commented that these were all met by his company, including those which guarantee adequate AML and KYC safeguards and security against the risk of cyber attack. He said:

“What impressed us was that this [legislation] was in the works for a long time… It’s been well thought out, well considered. They are focusing in on quality over quantity.”

Gibraltar, known affectionately as “The Rock” among residents and visitors, and home to the only Barbary macaques living in Europe, has begun attracting new and existing fintech companies to its shores. It is attempting to follow in the footsteps of other European countries such as Malta and Switzerland, both of which have seen the arrival of major cryptocurrency players like Binance and Bitmain in 2018. It now holds regular events such as the Gibraltar International Fintech Forum, demonstrating the country’s serious intent when it comes to encouraging fintech companies to do business there.

Coinfloor’s CEO said that he was glad to be able to fulfil the requirements of the new legislation, thereby securing a position in Gibraltar’s blockchain and cryptocurrency ecosystem, particularly as the UK exchange had recently been forced to lay off employees due to weakening demand in the UK through Bitcoin’s fall from its 2017 highs. He argued:

“It’s never desirable to make these changes, but it’s a natural part of the market cycle… The market has contracted and you should make appropriate changes to your team . . . It’s happening across this space.”

Despite some companies looking to Gibraltar as a possible home, it is more likely that Malta, with its vibrant crypto community and favourable blockchain legislation, will be become a favourite with established exchanges and startups, particularly given the ongoing concerns regarding a no deal Brexit.

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