A UK cryptocurrency trading platform has introduced what they refer to as “the world’s first regulated futures contracts” for Ethereum, the second-largest cryptocurrency. The will allow investors to place both long and short positions on the currency, reportedly to allow for more efficient investments in the market. Some are seeing this move to allow for both short and long market positions as evidence that Ethereum is “growing up” – however, it is still unclear exactly what effect this will have on the market.
The firm behind the futures contracts is the cryptocurrency exchange Crypto Facilities. Crypto Facilities fall under the regulation of the British FCA (Financial Conduct Authority) and have a history of dealing in the trade of other cryptocurrency derivatives. It already offers futures for both Ripple and Bitcoin, and has a cooperation with the Chicago-based trading firm Akuna Capital to supply liquidity for the upcoming Ethereum derivatives offering, in addition to the British trading firm B2C2. After publishing a press-release announcing the move into Ethereum futures, Crypto Facilities started offering the Ethereum derivatives this past Friday.
Crypto Facilities’ CEO, Timo Schlaefer, motivated the move towards Ethereum futures by explaining how the Ethereum network is the dominant blockchain platform for smart contracts. Moreover, he went on to state that he believes that the new trading tools announced will “bring greater liquidity to the marketplace”, as well as to boost the appeal of Ethereum trading to investors. This comes as there is some uncertainty regarding how Ethereum should be financially regulated. There are calls for Ethereum to be regarded as a security: something, however, which one of the Ethereum Foundation’s founders – Joseph Lubin – is disputing.
Nonetheless, Schlaefer said that this discussion is not pertinent to the trading of Ethereum futures. Rather, Schlaefer argued, his company deals in derivatives and is following all the relevant regulation. Therefore, the issue of whether Ethereum should be viewed as a security or not is purely academic. Furthermore, Schlaefer said that the trading of Ethereum futures contracts should be viewed as an indicator that Ethereum is on a similar journey towards becoming more mature that Bitcoin experienced last year.
Bitcoin futures trading started in December of last year, with an introduction on the Chicago Board Options Exchange on December 10. However, an economic letter from the Federal Reserve Bank of the San Francisco made the rounds earlier this week, arguing that the introduction of Bitcoin futures trading played a part in the fall of the price of Bitcoin last December. It is still unsure what credence this theory holds, however investors will surely watch the future of Ethereum with great interest.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.