The Crypto Derivatives Platform has gone live with physically-settled US bitcoin futures contracts

As2019 winds down we seem to be revisiting “Crypto winter” from 2018 albeit this one is lighter in intensity. Although we are entering 2020 with a bearish undertone in crypto markets, the institutional adoption of digital assets remained strong in 2019. The highlight of Crypto adoption this year was the launch of Bakkt — a financial service platform that offered physically-settled bitcoin futures. The platform received a lot of attention since it was backed by some big industry names like Microsoft, Fidelity & ICE (owner of the New York Stock Exchange).

Although Bakkt got off to a sluggish start, trading in BTC physical futures has gathered pace in the past few months. The price action in crypto markets, however, has remained subdued despite its launch. As Bakkt was stealing all the limelight, a Chicago-based derivatives platform by the name of ErisX (founded in 2010) was getting ready to launch Bakkt’s competitor that would offer Crypto custody solutions.

The first announcement to this effect was made way back in October 2018, a few months after the Bakkt startup launched in summer of the same year. What makes the launch of Bakkt’s only competitor in the space is that it has the backing of a swath of Wall Street and crypto names — Bitmain, CBOE, CME, ConsenSys, Digital Currency Group, Fidelity Investments, Nasdaq, TD Ameritrade, and Pantera Capital. A list of investors which is as good as Bakkt’s backers, if not better.

ErisX has spent the past 12 months to procure licenses from the US Commodity Futures Trading Commission (CFTC) including the one for its derivatives clearing organization (DCO) in July of this year. The wait is finally over, as the crypto trading platform, which was offering spot trading in Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH) & Litecoin (LTC) has gone live with its physically-settled bitcoin futures.

According to the details on their website, bitcoin futures will have a contract size of 0.1 BTC with the traders able to trade monthly or quarterly contracts. There will be a position limit of 200,000 contracts for traders with a minimum price increment of $1 per bitcoin (or $0.10 per contract). Other details are available in the chart above.

There are also reports of ErisX planning to become the first regulated futures markets for Ethereum as the company’s CEO wrote an extensive letter to CFTC on the importance of Ethereum futures. While ErisX’s futures market opened Tuesday, a specific date has not yet been announced on when the investors will be able to trade the futures product actively — expected sometimes in the new year. ErisX currently offers spot trading services in 44 different U.S. states, with plans to add another five states and four territories (Hawaii is not on this list).

Just like Bakkt, ErisX will deliver the underlying cryptocurrency to contract owners when they expire. In addition to that, it will act as a regulated custody service for hedge funds and institutional investors who are looking to invest in digital assets. Another important feature of the newly launched service is that ErisX will be able to self-certify new contracts with the CFTC.

While more competition in the Cryptoverse points to increased adoption of digital assets and is good news for the consumers who want to invest in the digital asset class, this might very well put further pressure on the crypto prices in the short term, with the futures giving traders the ability to sell the underlying asset.

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