Chicago-based cryptocurrency exchange Bitnomial has been given the green light by regulators to offer bitcoin futures and options contracts that will be physically settled. CFTC issued an “Order of Designation” to the exchange, thus giving it the status of a designated contract market as of Tuesday, April 20.
Bitnomial To Offer Regulated Physically-Settled Bitcoin Futures And Options
According to a press release on April 20, 2020, Bitnomial was approved to run a US futures and options exchange as a designated contract market (DCM). This means that the exchange is now allowed to offer options and futures contracts that will be settled with actual bitcoin on a contract’s expiry, instead of cash.
By offering margined and physically-settled futures and options contracts, Bitnomial becomes “the first and only startup exchange to achieve these capabilities.” The exchange will start user acceptance testing on April 27 and customers are allowed to sign up to take part in the process.
The founder and CEO of Bitnomial Luke Hoersten noted that the exchange will be offering a trove of interrelated products starting with quarterly futures, micro futures, and options. Moreover, all their products will first trade on a 37% margin and will be settled on-chain as opposed to book entry.
Crypto investing leader at Jump Capital Peter Johnson argued that crypto derivatives are gaining traction in the crypto industry but physically delivered derivatives are still inaccessible to a large portion of the United States traders.
Johnson further quipped:
“Bitnomial Exchange enables US traders to gain bitcoin exposure in a safe, regulatory compliant and capital-efficient manner. These products are also reliably tied to the underlying asset price via the option for physical delivery. We’re excited to be partners with a company that is committed to meeting the highest regulatory standards and increasing the accessibility of crypto derivatives to US traders.”
Bitnomial’s Journey To The Bitcoin Derivatives Market
Founded in 2014, Bitnomial filed an application to run a crypto exchange two years after its establishment. CFTC finally approved the application four years later in April 2020.
In December 2019, the exchange raised $7.5 million in equity funding from a total of 12 investors including Jump Capital, Coinbase Ventures and DV Chain. Bitnomial is now the latest CFTC-approved exchange to offer bitcoin derivatives.
Meanwhile, the exchange joins major players like ErisX, Bakkt, LedgerX, and CME that are already offering bitcoin futures and options contracts. Notably, ICE’s Bakkt was the first to launch physically-delivered bitcoin futures contracts back in September last year.