CBOE Getting Ready to Launch ETH Futures By End of 2018

CBOE, the first futures and options exchange that traded Bitcoin futures last year, has announced that the launch of Ether futures is imminent.

ETHciting Times?

The Chicago Board Options Exchange (CBOE), which was the first to bring Bitcoin futures to the trading market, has declared that it is on the verge of launching Ether futures. Business Insider, citing a source close to the matter, reported that CBOE has earmarked the end of 2018 for launching the product as it wants to give ample time to the Commodities Futures Trading Commission (CFTC) to get properly acquainted with the new product, as well as provide valuable feedback. CBOE will use New-York-based crypto exchange Gemini’s underlying market as a base for its ETH futures.     

Market Reaction

This would make Ether the second cryptocurrency after Bitcoin to have a futures market. Bitcoin futures made their debut last December and helped propel it towards all-time highs shortly thereafter. This time, Ether has seen a price upswing of 3.5% in the current bear market as a result of this news; in fact, the entire crypto market as a whole has seen prices rally. William Hinman, Director of Division of Corporate Finance for the Securities and Exchange Commission remarked in June that Ether is not a security and therefore its trading does not constitute a breach in securities law. This ruling adds to the likelihood that the CBOE will get the go-ahead for its ETH futures. It would also pave the way for greater maturation for Ether via other forms of derivatives, potentially even exchange traded funds (ETFs). 

While CBOE actively seeks to grow their line of crypto-related products, rivals Chicago Mercantile Exchange (CME) have adopted a more cautious outlook. CME Group CEO Terry Duffy fears the ‘highly volatile’ nature of cryptocurrencies and cites that as the reason for not hurrying into further cryptocurrency contracts. Clearly, the recent repeated rejections and uncertainties around the status of other crypto derivatives like Bitcoin ETFs are playing into the precautionary attitudes of futures exchange operators. 

Crypto Futures: The Community Forker

The community perception around this news seems to find expression in the sentiment of the adage, ‘History repeats itself’. As with seemingly every development in the crypto world nowadays, this too has split the community into two, a fork of sorts.

On the one side are the believers, who are of the opinion that a successful launch of Ether futures could be a catalyst for positive change akin to the one that saw Bitcoin rise to $20k at the tail end of last year. Danny Kim, head of growth at cryptocurrency prime dealer for high volume traders and institutional investors, shares a similar insight.

CBOE's offering will enable crypto traders to take both long and short positions in Ether, and it's another step forward to a new accepted asset class. With this, I think the new investment opportunity will take crypto out of the bearish market and reverse to a new bull.

On the other side are the naysayers and non-believers. They claim this is nothing more than market manipulation by institutional investors at its worst, and attribute Bitcoin's massive drop from last year’s high of $20k to lows around $6k this year to the creation of Bitcoin futures and other derivatives by the likes of CBOE and CME. For them, crypto derivatives are against the very essence and ethos of cryptocurrencies, as the idea was to put the power back in the hands of the people and take it out of the hands of Wall Street gatekeepers.

The fear is obvious: that Ethereum futures would lead to an ETH crash that could work its way across all other cryptos. The irony in the name is hard to miss; it remains to be seen just what effect ETH futures will have on the future of the crypto market.