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Federal regulator gives OK for bitcoin futures to trade

05 December 2017

Official trading and full day trading of the futures will begin on December 11, and trading will be free through December.

CME, which owns various derivative trading platforms such as the Chicago Mercantile Exchange, said in a statement on Friday that there will be risk-management measures in place as bitcoin is a "new, uncharted market". CBOE said the move comes as the total value of bitcoin outstanding has grown from less than $1 billion to over $183 billion over the last five years, with daily turnover at over $10 billion.

On Friday a United States federal regulator gave the go ahead to the CME Group to start trading bitcoin futures later this month, the first time the digital currency will be traded on a Wall Street exchange and subject to federal oversight.

Denis Baranov, a principal consultant at technology consultancy DataArt, says some bitcoin exchanges already offer futures, but the support of a major exchange could boost bitcoin's legitimacy.

Bitcoin's price has soared tenfold this year, but many market participants warn of a bubble as it topped $11,000 for the first time last week.

The exchange announced Friday that it would begin offering bitcoin futures trading, but it didn't specify a start date. The cryptocurrency is now trading at roughly $11,400, as per CoinDesk's Bitcoin Price Index (BPI). The first bitcoin futures contracts on a regulated USA exchange are set to launch on Sunday.

However, despite the cash-settlement process, some institutional investors have expressed concern at the addition of bitcoin-derived products to CME.

Following the launch of these products, many analysts predict that the Securities and Exchange Commission (SEC) will grant approval to the first exchange-traded fund (ETF) that invests in bitcoin futures contracts, potentially turning bitcoin into a mainstream financial instrument and portfolio asset.

Federal regulator gives OK for bitcoin futures to trade