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Chicago-based crypto exchange ErisX has filed a comment letter outlining the benefits of introducing regulated Ethereum futures contracts.
Chicago-based crypto exchange ErisX has filed a comment letter with the United States Commodity Futures Trading Commission (CFTC) in response to the agencyâs request for feedback on Ethereum (ETH)âs mechanics and market.
The letter, submitted on Feb. 15, sets forth the exchangeâs belief that âthe introduction of a regulated futures contract on Ether would have a positive impact on the growth and maturation of the market.â
As reported, ErisX is a reboot of traditional futures market Eris Exchange, and is expected to begin support for spot trading in Bitcoin (BTC), Ethereum and Litecoin (LTC), as well as futures contracts, in the second half of 2019, pending regulatoryâ approval.
The letter argues that âlisting and trading Ether futures compliantly on CFTC regulated markets is consistentâ with the CFTCâs efforts to foster âopen, transparent, competitive, and financially sound derivative trading markets [and] to prohibit fraud, manipulation, and abusive practices in connection with derivatives and other products subject to the [Commodity Exchange Act] CEA.â
The CFTC has long determined that Bitcoin is a commodity, given that it aspires to replace sovereign currencies â rather than a security, which would bring it under the Securities and Exchange Commission (SEC)âs charge. After significant debate, Ether too was cleared of a securities classification in June 2018.
In its letter, ErisX outlines the conceptual distinction between Ethereum and its predecessor, noting that âEthereum built upon some of the architectural principles of Bitcoin to extend [its] functionality of [a] distributed, (crypto-economically) secured, (blockchain-based) record-keeping system to include new computational capabilities for the execution of arbitrary code.â
In its diagnosis of the current state of the Ethereum market, the exchange affirms its view that a lack of regulatory clarity has prevented regulated enterprises from entering the sector, resulting in a preponderance of âunregulated or lightly regulated âexchangesâ [and] âbrokersâ [emerging] to fill the gap, many of them off-shore.â The associated risks â including price volatility and liquidity fluctuations â are therefore:
âNot unique to Ether, but [may be exacerbated by] the current fragmented global market structure of trading platforms and âexchangesâ with significantly varying degrees of regulatory oversight and operational transparency and integrity.â
ErisX thus contends that standardized, CFTC-regulated ETH products would draw broader participation from institutional actors and commercial users, resulting in âmore robust, liquid, and resilient markets,â better risk management and more efficient, accurate price discovery.
As reported, ErisX has this month appointed three veterans from Barclays, YouYube and the Chicago Board Options Exchange to fill executive roles, having announced the appointment of ConsenSysâ Joseph Lubin to its board of directors in January.
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