The highly anticipated New York Stock Exchange owner’s contracts are about to be launched and Chicago’s Eris Exchange LLC will not be far behind. However, starting next month the firm that claims it was the first to market crypto futures has split from previous owners and will be launching derivatives for some of the top crypto assets to Asian investors.
According to Chicago Business CoinfloorEX, a division of UK crypto exchange Coinfloor, has been renamed to Coin Futures and Lending Exchange, or CoinFLEX. It aims to enter the highly competitive market and has solid backing from the UK’s oldest Bitcoin exchange which will also retain a stake in the new venture.
A consortium of crypto diehards including Bitcoin Cash evangelist Roger Ver owns the new exchange which will be managed from Hong Kong by Coinfloor co-founder Mark Lamb. With a leverage of up to twenty times, CoinFLEX will be offering futures for Bitcoin, Ethereum and Bitcoin Cash. It is going up against BitMEX, also based in Hong Kong which has contracts leveraging up to 100 in some cases.
The difference with these futures is that they will be physically covered meaning that investors will be paid out in cryptocurrency rather than fiat upon contract expiry.
“Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery. Volumes are reduced because of a problem of trust when it comes to cash-settled trades.” Lamb said.
CoinFLEX is taking a gamble itself by using Tether to trade against, but providing there are no further auditing issues for USDT, and it retains its peg to the dollar things should go smoothly. It will also issue a contract using USDC, the stablecoin from Circle and Coinbase.
“Tether is the most liquid, highest volume stable coin that exists right now and seeing the resolution of recent issues and attestations by banks and outside firms make us confident in using it as a stable coin,” Lamb added.
The move comes just as the Intercontinental Exchange Inc. readies its own futures as part of the Bakkt venture. Entering the market now when things are at the bottom paints a whole different future picture for crypto futures that had an entirely different outlook when they first came on to the scene in December 2017.