While cryptocurrencies can display strong swings without any apparent fundamental trigger, it’s possible today’s ETH run was catalyzed by positive news regarding the attitude of U.S. regulatory agency CFTC (Commodity Futures Trading Commission) towards the idea of Ethereum futures being traded on a regulated U.S. exchange.
CFTC-regulated Ethereum futures might not be too far away
Earlier today, CoinDesk published a report citing an unnamed CFTC senior official as saying that the agency would be comfortable with approving an ETH futures contract for trading if it meets the agency’s requirements:
“A derivatives exchange comes to us and says ‘we want to launch this particular product.’ … If they came to us with a particular derivative that met our requirements, I think that there’s a good chance that it would be [allowed to be] self-certified by us.”
Let’s recall that late last year, the CFTC requested public feedback on both Ethereum as a public blockchain network and ETH as a digital asset.
While the first Bitcoin futures contracts approved by the CFTC already went live in December of 2017 on both the CME and CBOE exchanges, the context is slightly more complicated when it comes to Ethereum. Bitcoin is almost universally being viewed as a commodity, while a case can be made that ETH is a security – unlike BTC, which anyone was able to mine from the start, ETH was initially offered through an initial coin offering (ICO).
Still, even though the SEC, the chief U.S. securities regulator, hasn’t come out with a definitive stance on Ethereum, the director of the agency’s Division of Corporation Finance, William Hinman, stated in a June 2018 speech that he does not believe that ETH is a security in its current state.
If a regulated Ethereum futures contract does indeed come to the U.S. market, it has the potential to open up the market to a class of investors that are not comfortable with existing marketplaces for speculating on the price of ETH.
The demand for crypto futures is certainly there – even though CBOE has decided to stop offering new Bitcoin futures, its larger competitor CME saw record trading volume on its cash-settled Bitcoin futures just a month ago with around $546 million in notional trading volume in a single day.