First Bitcoin Futures Contract (Part 5)

Those who are following my posts know that I try to explain in detail on any topic whenever I share any topic with you. This is the fifth part on this topic. In this post, I will explain about this groundbreaking event's impact on the regulation. Those who missed out on the last four posts can check them and hopefully, you will find the continuation of the topic from those posts. With that event, Bitcoin got some positive resolutions at that time. Let's scrutinize that event.

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One of the critical factors that made CBOE’s Bitcoin futures launch possible was regulatory approval from the Commodity Futures Trading Commission (CFTC). The CFTC is the U.S. regulatory body responsible for overseeing futures and options markets. In 2017, after careful deliberation, the CFTC allowed the CBOE and the Chicago Mercantile Exchange (CME) to launch Bitcoin futures, albeit with certain conditions. On the other hand CBOE’s Bitcoin futures were cash-settled. This means that no actual Bitcoin was exchanged at the end of the contract; rather traders settled their positions in cash based on the market price of Bitcoin at the contract’s expiration.

This cash-settled feature made the product more appealing to institutional investors. The institutional investors was in hesitation before that about the complexities of the technique problem of Bitcoin in direct investment. Wallet security and exchange navigation were the problem. But that was settled with that event as regulations came to existence in this form as explained earlier. The regulatory approval of Bitcoin futures was a significant step toward greater acceptance of crypto products in traditional financial markets. There were some concerns as well but overall the event was positive. In the next post I shall try to cover the condition and roles of institutional investors on that event.

~ Regards,
VEIGO (Community Mod)

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