Summary: In a groundbreaking agreement the stage is set to give traders access to Bitcoin through a traditional and well-regulated market. The CBOE and Gemini plan to allow more sophisticated options to traders as soon as later this year.
Bitcoin futures and options
The Chicago Board Options Exchange, hereafter CBOE, and Bitcoin exchange Gemini announced a joint agreement on Aug. 2. As part of the deal, Gemini will supply data to support the CBOE in a future listing of Bitcoin derivatives.
Gemini, owned by the Winklevoss brothers is known for multimillion dollar auctions of Bitcoin and recently launched Ethereum auctions as well - although they lack the buyer interest that Bitcoin has captured. It should be noted that the CBOE and Gemini still await regulatory approval, although it is expected to be granted soon.
The news comes just days after the CFTC regulated SEF and DCO (swap execution facility and derivatives clearing organization) announced that is has received approval from the Commodity Future Trading Commission - a milestone as the first federally regulated platform to offer options and future contracts for Bitcoin.
The agreement gives the CBOE exclusivity to Gemini data that can be used to create indices. Coupled with futures and options, we see that the cryptocurrency trading space is quickly becoming more mature and sophisticated. In a statement, Gemini CEO does note that security and compliance remain at the forefront.
Tyler Winklevoss says:
“Gemini’s key concerns in the cryptocurrency ecosystem have always been security, compliance, and regulatory oversight. By working with the team at CBOE, we are helping to make Bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors.”
The CBOE seems very welcoming of Bitcoin to the market, chairman Ed Tilly states:
"We very much look forward to responding to the growing interest in cryptocurrencies through the creation of Bitcoin futures traded on a regulated derivatives exchange, with the many expected benefits that this brings, including transparency, price discovery, deep liquidity and centralized clearing...Gemini has demonstrated time and again its foresight and expertise in this area of finance. The team’s focus and determination to grow the Bitcoin market and secure appropriate regulatory oversight as a New York trust company makes them ideal for this venture. We are incredibly proud of this agreement and look forward to all that we can achieve together.”
"If all goes to plan, we will see Bitcoin included on the CBOE as soon as Q4 this year early 2018."
As more traditional financial markets begin to take cryptocurrency trading seriously, the next hurdle is clearly well regulated and safe exchanges. As recently as this year another exchange exit caused a stir for traders - this time it was BTC-e after being closed down due to money laundering operations.