Launch of Ethereum Futures Still ‘Up In The Air’
In mid-December, as CBOE’s and CME’s Bitcoin (BTC) futures offering turned one-year-old, rumors began to mount regarding a similar vehicle for Ethereum (ETH). As reported by Ethereum World News, the U.S. Commodities Futures Trading Commission, the financial regulator that holds jurisdiction over certain crypto instruments, began to look into Ether. In a public release, the somewhat crypto-friendly body wrote:
The RFI [Request For Information] also seeks to understand similarities and distinctions between Ether and bitcoin, as well as Ether-specific opportunities, challenges, and risks.
As this seemingly innocuous development broke, many crypto pundits and commentators began to speculate that the entity was looking to get feedback on the Ethereum project to precede a ruling on ETH-backed vehicles.
While it seems that strides were made behind closed doors, a recent report from The Block claims that providers of products similar to Ethereum futures themselves are skeptical of such offerings. Speaking to the outlet in an interview, Paul Chou, chief executive of crypto investment startup LedgerX, explained that there’s only a 50/50 chance that ETH vehicles go live in 2019. Backing his quip, Chou explained that many proposals for the aforementioned product type are “premature,” just as Bitcoin exchange-traded fund (ETF) applications were just two years ago.
The LedgerX chief’s sentiment was echoed by other pundits that The Block spoke to. Former CFTC advisor Jeff Bandman, the head of a cryptocurrency consultant group, explained that Ethereum’s proposed plan to integrate Proof of Stake (PoS) may complicate regulations, specifically due to the potential risks.
Nelson Rosario, an attorney with hands in the proverbial crypto jars, also noted that staking may be seen as suspicious in regulators’ eyes. Likely referencing physically-held futures, Rosario explained that live staking with Ether may complicate products to high hell while confusing network developers in the process.
While the prospects for ETH-backed futures in America seem ‘up in the air’, across the pond, there may be a different story. Per previous reports from us, a Hong Kong-headquartered, Roger Ver-backed up-and-coming crypto startup, now named CoinFLEX, is planning to offer physical Ether futures with up to twenty times leverage. It wasn’t divulged when the vehicle would go live, but firm founder, Mark Lamb, seemed quite optimistic, both for his firm and the future of crypto-related derivatives. In a recent interview with Bloomberg, he claimed:
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.
Interestingly, many analysts and researchers are unconvinced that such a product would push the value of Ether higher. In fact, in early-September of last year, Tom Lee, Fundstrat’s in-house controversial crypto commentator, claimed that the product would hurt ETH, but aid BTC. Lee remarked that Ether futures will allow speculators to weigh down on the price of ETH.
Despite Ethereum Skepticism, Bitcoin ETF Hype Remains
All this talk surrounding Ethereum futures comes amid a newfound hype for Bitcoin ETFs and products of similar caliber. And interestingly, while futures are seen as less demanding than ETFs, analysts have high hopes for the latter, compared to the former.
Just recently, Bitwise Asset Management filed a Bitcoin ETF application to the U.S. Securities and Exchange Commission via an S-1 Form. Just days earlier, the Winklevoss Twins, the two behind one of the first, if not the first Bitcoin ETF proposal (which was denied), made it clear that they expect to see such a product through, whether it takes months, years, or even decades.
And, a few days before that, Bloomberg sources claimed that Japan’s regulators were looking into allowing Bitcoin ETF proposals to be filed. Yet, these claims were quickly rebutted by official spokespeople. Regardless, this accentuates how there continues to be a discussion on the matter, even amid an extended price lull.
Title Image Courtesy of eberhard grossgasteiger on Unsplash