The U.S. Commodity Futures Trading Commission gave approval to Chicago Mercantile Exchange Inc. (CME) and CBOE Futures Exchange (CFE) self-certified contracts for bitcoins futures. CFTC also gave Cantor Exchange a contract for bitcoin binary options.
Bitcoin recovered back from its 20 percent plummet on Thursday back to $10,500, as it is now up 5.6 percent on Friday morning.
“Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,” said CFTC Chairman J. Christopher Giancarlo.
“We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts’ price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages.” added Giancarlo.
While CBOE is currently under regulatory approval and review, CME has set to launch its bitcoin futures in less than three weeks on Monday, December 18, 2017.
CME Group's Bitcoin futures will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin, said CME.
"We are pleased to bring Bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities," said Terry Duffy, CME Group Chairman and Chief Executive Officer.
A Cboe spokesperson initially told CNBC the bitcoin futures launch is expected "probably before the end of the year," but later clarified, saying the exchange could not know a specific date. "We are operationally ready and we will be announcing a launch date shortly," the spokesperson said in the new statement.
Nasdaq has also had interests and plans to launch its own bitcoin futures on its New York-based exchange, but according to sources familiar with the matter, Nasdaq is not expecting to launch them until mid year 2018.
In order to regulate trading, all three exchanges and the Commission will be heavily regulating trading, as well providing the Commission with additional surveillance information regarding the futures.
The Commission says once the contracts are launched, the CFTC staff will engage in risk-monitoring activities. The activities will include monitoring and analyzing the size and development of the market, positions and change in positions over time, open interest, initial margin requirements, and variation margin payments.