Market Slump Puts Crypto Derivatives in the Spotlight


As volatility returns to cryptocurrency markets, with severe losses over the previous week or so, digital asset exchanges and different fintech platforms have once more turned their consideration to crypto derivatives. Devices equivalent to bitcoin futures contracts might help merchants hedge in opposition to dangers and even revenue from falling costs. 

Additionally learn: Isle of Man Updates Registration Rules for Cryptocurrency Businesses

Huobi Launches Crypto Derivatives Market

Market Slump Puts Crypto Derivatives in the SpotlightSingapore-based digital asset trade Huobi has announced the beta launch of its cryptocurrency derivatives buying and selling platform. Huobi Spinoff Market (Huobi DM) permits customers to revenue from rising and falling cryptocurrency costs by opening lengthy or quick positions.

In keeping with a publish on Huobi’s web site, the brand new platform will initially begin with BTC contracts denominated in U.S. {dollars}, with the corresponding cryptocurrency as margin. The revenue and loss settlement shall be carried out within the digital forex.

Huobi additional explains that every contract represents a certain quantity of cryptocurrency. “The face worth of a BTC contract is $100 and the minimal value change so as ebook is aggregated to $0.01,” the announcement particulars. The face worth of different contract varieties shall be $10, and the minimal value change within the order ebook shall be aggregated to $0.001.

Huobi DM gives weekly and biweekly contracts settled on Fridays, in addition to quarterly contracts settled on the final Friday of March, June, September and December. Customers have to pick the leverage — the obtainable choices are 1x, 5x, 10x and 20x. All contracts ought to use the identical leverage and can’t be modified when there are nonetheless open positions or pending orders.

Okex Reminds Merchants About Its Futures Contracts

Market Slump Puts Crypto Derivatives in the SpotlightIn a post revealed this week underneath the title “Introduction to Futures Contract,” crypto trade Okex mentioned crypto derivatives. The Hong Kong-headquartered buying and selling platform gives customers futures contracts for quite a lot of cryptocurrencies — BCH, BTC, BTG, LTC, ETH, ETC, XRP and EOS.

The contracts are settled by BTC and their worth is calculated in U.S. {dollars} equal. Every contract represents $100 of BTC or $10 of different cryptocurrencies. The minimal value intervals are 0.01 level for BTC/BTG and 0.001 level for LTC and different digital belongings.

The contracts expire on a weekly, biweekly and quarterly foundation and the supply time is Friday on the week of expiry. The settlement date is similar because the supply date and settlements are carried out in digital cash. The leverage choices obtainable are 10x or 20x.

Okex launched BCH, ETH and ETC futures a couple of yr in the past. In a transfer that stunned merchants, the platform modified the phrases on $135 million of BCH derivatives within the wake of the current Bitcoin Money fork, as reported by Bloomberg. On Nov. 14, as costs went down a day earlier than the community cut up, Okex delivered all BCH contracts based on the final traded value at 9:05 a.m. (CET). The trade attributed its choice to excessive volatility within the BCH spot and futures markets. It additionally stated it had not issued an earlier announcement on fears it may set off market manipulation.

Plans for Extra Crypto Derivatives

Quite a few bulletins have been revamped the previous yr about new choices of crypto derivatives. In January, Japanese funding group Fisco Corp. launched a cryptocurrency fund and revealed plans to supply derivatives merchandise based mostly on digital belongings. In August, one other Japanese firm, SBI Crypto Funding, acquired a 12-percent stake in U.S.-based buying and selling platform Clear Markets. It additionally shared its intention to create a platform that may permit institutional buyers to commerce cryptocurrency derivatives.

Market Slump Puts Crypto Derivatives in the Spotlight

One other firm, then again, not too long ago delayed its plan to open a brand new bitcoin futures buying and selling platform. Intercontinental Trade, the proprietor of the New York Inventory Trade, introduced this week that it’s going to postpone the launch of its Bakkt platform. Buying and selling was initially expected to start in December of this yr. In keeping with a current announcement, nevertheless, Bakkt is now scheduled to go dwell on Jan. 24, 2019, as reported on Wednesday.

Regulatory Challenges

Cryptocurrency-based derivatives merchandise have additionally attracted the eye of monetary authorities world wide. Within the U.S., bitcoin futures have been permitted and are presently regulated by the nation’s Commodity Futures Buying and selling Fee. And France’s monetary markets regulator, Autorité des marchés financiers, issued a press release in February of this yr indicating its intention to crack down on crypto derivatives, stating that the supply of such devices would require authorization.

Market Slump Puts Crypto Derivatives in the SpotlightIn September, the European Securities and Markets Authority (Esma) renewed restrictions it had imposed on issues associated to crypto derivatives, equivalent to contracts-for-difference (CFDs). Esma’s ban on the advertising, distribution and sale of CFDs to retail prospects, which was enforced in August, was extended for one more three-month interval, ranging from Nov. 1.

In the meantime, the U.Ok. Monetary Conduct Authority (FCA) introduced in a report revealed in October that it’s considering a ban on the sale of derivatives based mostly on digital belongings, together with CFDs. This chance was confirmed this week by Christopher Woolard, the FCA’s govt director of technique and competitors. He was quoted as saying that crypto-based CFDs pose a menace to retail buyers within the nation.

What do you consider cryptocurrency derivatives? Share your ideas on the topic within the feedback part under.

Photos courtesy of Shutterstock.

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