Cboe Reportedly Close to Launching Ether (ETH) Futures

Siamak Masnavi

Cboe Global Markets, which made Bitcoin (BTC) futures available for trading on the Cboe Futures Exchange (CFE) on 10 December 2017, is getting close to launching Ether (ETH) futures.

According to a report, by Frank Chaparro for Business Insider, published on Thursday (30 August 2017), Cboe "is telling market makers it is close to rolling out futures for ether, the second-largest cryptocurrency by market capitalization." People familiar with the matter told Business Insider that this new futures product may launch even as soon as Q4 2018. 

As with CFE's Bitcoin futures (trading under the ticker symbol "XBT"), Ether futures are very likely to be cash-settled contracts based on the Gemini digital asset exchange's auction price for Ether (denominated in U.S. dollars). 

The main benefits for traders of an Ether futures product are "including transparency, efficient price discovery, deep liquidity and centralized clearing." Ether futures would provide a centralized marketplace for participants to trade based on their view of Ether prices, gain exposure to Ether prices or hedge their existing Ether positions.

It is worth noting that Chris Concannon, Cboe's President and Chief Operating Officer, had hinted, as early as 1 December 2017, that his firm could be interested in launching futures products for cryptocurrencies other than Bitcoin, such as Ether and Bitcoin Cash.

And then on 14 June 2018, William Hinman, who is the director of the U.S. Securities and Exchange Commission’s division of corporation finance, said at a Yahoo Finance conference in San Francisco:

"Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions... And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value."

The Cboe President, upon hearing the news, later on the same day, said in a statement released to Bloomberg:

“We are pleased with the SEC’s decision to provide clarity with respect to current Ether transactions... This announcement clears a key stumbling block for Ether futures, the case for which we’ve been considering since we launched the first Bitcoin futures in December 2017.”

As for Cboe's main rival in the U.S., CME Group (which also offers Bitcoin futures), Terry Duffy, its Chief Executive Officer, told Bloomberg on 1 February 2018 that it was going to take a cautious stance toward introducing futures products for other cryptocurrencies:

“I’m not going to get over my skis on something that could be potentially damaging to the reputation of the company... To say that you should just automatically go ahead and list others I think is a little irresponsible right now... We need to learn more.”

And Duffy re-iterated this cautious view in another interview with Bloomberg on 26 July 2018:

“I will not just put products up there to see where they’re going to go... I will take a wait and see approach with Bitcoin for now.”

It is not clear what the long-term impact on Ether's price will be if/when an Ether futures product is introduced by Cboe, but at press time, according to data from CryptoCompare, ETH is trading around $280.20, almost flat in the past 24-hour period.

Featured Image Courtesy of Cboe Global Markets