How Coinfloor’s Bitcoin Futures Differs from CME and CBOE Bitcoin Futures

London-based trading platform CoinfloorEX is launching the first physically-delivered bitcoin futures will be launched in April. Bitcoin Futures at some of the widely used exchanges like Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME), have tracked the price of bitcoin at cryptocurrency exchanges for their futures contracts but they were settled in cash.

Mark Lamb, founder at Coinfloor, in a statement said,

“When you talk to the liquidity providers, they all say the same thing, which is they want a physically delivered futures contract so they can hedge their exposure across exchanges.”

What is “Physically Delivered Bitcoin Futures Contract”?

A physically-delivered Bitcoin futures contract entails settlement of the contract using actual Bitcoin. To break down for you, parties will have to digitally transfer Bitcoin between themselves. However the task may be a tough nut to crack keeping in mind the physical delivery of future contract positions is subject to several legal fulfillments, which may run counter to bitcoin’s blockchain.

For example, futures contracts have to incorporate Know Your Client (KYC) and Anti-Money Laundering (AML) requirements. They are also subject to high level security for the stored asset. Till now, Coinfloor has not divulged details about how it plans to adhere to these provisions. But it may be assumed that these kind of operations may make the tasks smoother for Coinfloor in the future.

There is another set of differences between the Bitcoin Futures contracts at CoinfloorEX and those at CME and CBOE.

• One contract unit of CoinfloorEX Bitcoin Futures is equal to 0.0001 Bitcoin while CME and CBOE each have contract units of five and one Bitcoin each, respectively.
• Coinfloor’s Bitcoin Futures contracts have initial margin requirements of 20% and maintenance margin requirements of 15% while CME has initial margin requirements of 43% along with variation margins.

Also Read: Difference Between CBOE and CME Bitcoin Future Contract

Coinfloor has also officially brought to light, a hard fork policy for its futures contracts. In a document, the exchange has listed potential scenarios related to hard forks and how it plans to tackle them. With so many progressive measures, Coinfloor surely looks like it’s going to shine bright in the exchange market.

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Rohit Kukreja

Rohit Kukreja is a Commerce graduate with Financial Markets expertise involving Stocks, Forex, Futures & Options Market and now Bitcoins & Cryptocurrency Markets. Blockchain Enthusiast but not a techie, Rohit is an active member of various Blockchain & Crypto communities all over India.