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Bitnomial, unlike CME, appears to focus on physically-settled contracts, it means that clients can get the actual Bitcoin when the contract expires, rather than the fiat equivalent.
The small world of Bitcoin futures in the United States now has a new addition with the CFTC (Commodity Futures Trading Commission) approval for Bitnomial exchange. Bitnomial exchange can now operate as a designated contracts market (DCM), i.e. to offer Bitcoin futures and options contracts.
Before Bitnomial exchange approval, only 5 firms in the country could provide Bitcoin futures and option contract services. They are CME, Cboe, Bakkt, ErisX, and LedgerX. However, Cboe contract ended in 2019, as ErisX sees the only little volume on its futures. Bitnomial Exchange appears to concentrate on physically-settled contracts, i.e., clients get the actual Bitcoin when the contract expires, but not the equivalent in fiat.
Reportedly, before CFTC approved Bitnomial, there was an onsite technical evaluation of the operation of the exchanges. Bitnomial in the same light said it was the “first and only startup exchange” to get approval to offer both margined and physically delivered bitcoin futures and options contracts in the US”.
CFTC Approval for Bitnomial May Be a Boost for Bitcoin Futures
“The approval allows Bitnomial to tackle a confluence of generational shifts in financial markets: First, a new generation of customers are emerging as savvy with trading, technology, and delivery. Second, innovative new unregulated derivatives are booming with daily volumes topping $45 [billion] but maybe illegal for many US traders,” it said in a press release.
The release stated further that Bitnomial exchange looks forward to getting new clients for “new growth areas,” saying that the existing legacy firms have been finding it difficult tapping into this base.
The new exchange has started setting up users’ acceptance settings scheduled to start April 27th and has begun user sign up. Luke Hoersten, the founder and CEO of Bitnomial exchange in a statement, said that the firm would begin quarterly futures, micro futures, and options. Contracts trade on 37% margin and will settle on-chain rather than a book entry.
Peter Johnson, from Jump Capital, said that physically-settled bitcoin futures contracts are “still largely inaccessible” to much of the US market.
According to the SEC, Bitnomial was able to raise over $7 mln in an equity funding from 12 investors in December 2019.