Building on its work in calculating and publishing the CME CF Bitcoin Reference Rate (BRR), CME Group has announced that it plans to launch a new cash-settled bitcoin contract that will allow bitcoin futures to be listed on and traded subject to the rules of the CME. The launch remains subject to all relevant regulatory reviews. In its formal press release, CME Group states that it aims to complete the launch by the end of 2017.
Previously, in July 2017, the U.S. Commodity Futures Trading Commission (CFTC) voted unanimously to grant Ledger X, LLC status as a registered derivatives clearing organization and a registered swap execution facility under the U.S. Commodity Exchange Act (CEA). Those orders authorized LedgerX to provide clearing services for fully collateralized digital currency swaps and for bitcoin options. If CME Group obtains the requisite approvals for bitcoin futures, the path for trading swaps, options, and futures on bitcoin will have been cleared. The CFTC has previously announced its view that bitcoin is a commodity for purposes of the CEA, and thus the trading of swaps, options, and futures on bitcoin are subject to the CFTC's regulatory oversight.
The BRR was created in November 2016 by CME Group and Crypto Facilities Ltd. Designed in accordance with the IOSCO Principles for Financial Benchmarks, the BRR aggregates the trade flow during the calculation window of spot exchanges on Bitstamp, GDAX, itBit, and Kraken to calculate a U.S. dollar price of one bitcoin as of 4:00 pm London time. CME Group and Crypto Facilities Ltd. also publish the CME CF Bitcoin Real Time Index (BRTI), which is intended to reflect the fair, instantaneous U.S. dollar price of bitcoin in a spot price.
The dollar price of bitcoin increased dramatically after CME Group's announcement, which many analysts attribute to the perception that having the ability to trade bitcoin futures will enhance trading in the virtual currency and potentially increase its value.
CME Group's initiative shows the interest by established financial market participants in facilitating trading in bitcoin and other virtual currencies—as well as a keen interest in keeping their role in financial markets as virtual currencies expose a new world of digital assets.
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