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CBOE Receives CFTC Approval to List Bitcoin Futures

Last Updated March 4, 2021 5:02 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:02 PM

The Chicago Board Options Exchange (CBOE) has received approval from the U.S. Commodity Futures Trading Commission (CFTC) to list bitcoin futures contracts on its trading platform.

CBOE announced on Friday that it had received approval from the CFTC to offer bitcoin futures trading on CFE, its dedicated futures exchange. The futures will trade under the ticker symbol “XBT,” and a launch date will be announced following a period of regulatory review.

In a concurrent announcement, fellow Chicago-based exchange operator CME Group revealed that it has received CFTC approval to begin trading bitcoin futures on its trading platform on December 18. Nasdaq Inc. is reportedly also planning to add bitcoin contracts to its futures exchange next year.

Though much-anticipated, the arrival of bitcoin futures contracts is also highly-controversial in some sectors of the investment sector. Consequently, the CFTC issued a statement  explaining that the commission required the exchanges to agree to “significant enhancements” intended to protect customers and prevent the markets from becoming too volatile.

“Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,” said CFTC Chairman J. Christopher Giancarlo. “As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets.”

Bitcoin’s volatility has been on display this week, as the asset’s price has fluctuated as much as $2,000 during intraday trading amidst its record-setting run. On Wednesday, the markets were so hectic that they would have flipped CME’s “circuit breaker” — the limit at which the exchange allows the price of a contract to fluctuate during intraday trading — more than a dozen times.

However, based on its conversations with CBOE, CME, and Cantor — another group planning to launch bitcoin derivatives — the CFTC director said that he is confident that the operators will monitor and account for disruptive events such as market manipulations and trading outages at cryptocurrency exchanges.

“We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts’ price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages. Nevertheless, investors should be aware of the potentially high level of volatility and risk in trading these contracts,” Giancarlo said.

The bitcoin price traded up on the news, briefly rising as high as $10,760 on bitcoin exchange Bitfinex before tapering to a present value of $10,624

Featured image from Shuterstock.