The Chicago-based CBOE is reported to be launching Ethereum futures in the impending months. This information, reported by Business Insider, would make CBOE the first United States exchange to have such a listing.
Reducing The Risk
In cryptocurrency, futures trading allows investors to buy or sell a specified asset at a chosen price at a specific date in the future. These trades are used to mitigate investment risk, as the contract between investor and exchange is immutable.
The source states that futures may launch by the end of this year, with the Winklevoss twins’ cryptocurrency exchange, Gemini, providing the pricing data. Gemini already provides the data for CBOE’s Bitcoin futures which started late last year.
Before moving forward, CBOE wants some extra overlook from the Commodity Futures Trading Commission (CFTC). This group is lead by a Christopher “Cryptodad” Giancarlo, who has always been fond of cryptocurrencies.
It’s important to note that the Securities and Exchange Commission (SEC) doesn’t consider either Ether or Bitcoin as a security. This means that CBOE may face less of a challenge in establishing Ethereum futures due to a lack of regulation surrounding the asset.
From BTC to ETH
As one of the exchanges to push Bitcoin futures, it only makes sense that CBOE would jump on Ethereum next. The coin is second in market cap only to Bitcoin, with a convincing use case to boot. That’s not to mention CBOE’s interest in all sorts of different cryptocurrency projects fueling this choice.
However, some have argued that futures trading increases the possibility of shorting the price of an asset. In a market as volatile as cryptocurrency, that is a genuine issue that could contribute to a substantial decline in Ethereum’s pricing.