Crypto trading platform Erisx has launched a bitcoin futures market regulated by the U.S. Commodity Futures Trading Commission (CFTC). Its physically settled bitcoin futures contracts trade alongside its spot market which supports four cryptocurrencies. Erisx has obtained a license from the U.S. Financial Crimes Enforcement Network (FinCEN) and is currently approved to operate in 44 states, with a plan to expand to 53 states and U.S. territories.
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Physically Settled, Regulated Bitcoin Futures
Erisx announced on Tuesday the launch of its regulated bitcoin futures market. The platform’s physically settled bitcoin futures contracts are offered alongside its spot market for “price transparency and collateral efficiency,” the company detailed. Initially, only monthly and quarterly contracts are offered.
Since the contracts are physically settled, “settlement will be made by movement of the digital currency to the buyer of the futures contract and US dollars to the seller of the contract,” Erisx’s website describes. The current requirement to become a member of the platform is a minimum balance of $10,000.
Erisx’s current futures product.
Prior to Tuesday’s launch, the company ramped up its team and developed technology for its exchange’s matching engine (TME) and clearinghouse’s clearing system (TCS). The company also developed risk-mitigating functionality to enable efficient price discovery such as self-match prevention, price banding, and maximum order sizes. Its futures clearing platform was built from scratch. Currently, Erisx’s spot trading platform supports BTC, BCH, ETH, and LTC, which can be traded against the USD or BTC.
CFTC, FinCEN and State Licenses
Erisx’s physically settled bitcoin contracts are traded through its Designated Contract Market (DCM) and cleared through its recently launched clearinghouse, Eris Clearing, which is a Derivatives Clearing Organization (DCO). Both entities are regulated by the CFTC. The company clarified that these designations give it “the ability to clear and guarantee futures trades, which eliminates counterparty risk for our members.”
“It was important for us to complement our futures market with a spot market to provide price transparency and collateral efficiencies,” Erisx continued. “However, we could not operate this cash market without acquiring Money Service Business licenses under the Financial Crimes Enforcement Network (FinCEN) as well as Money Transmitter Licenses on the state level.” The platform elaborated:
To date, we offer spot trading in 44 states with plans to have coverage for 53 states and U.S. territories (sorry Hawaii).
Erisx further revealed:
Early next year, we will be welcoming our intermediary partners such as futures commission merchants and brokerage houses into our marketplace.
Another regulated platform offering physically delivered bitcoin futures contracts is Bakkt, a digital asset platform powered by Intercontinental Exchange Inc., the parent company of the New York Stock Exchange. Bakkt began trading its bitcoin futures products in September. Last week, the platform launched bitcoin options in the U.S. and cash-settled bitcoin futures in Asia.
What do you think of Erisx launching a regulated bitcoin futures market? Let us know in the comments section below.
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Images courtesy of Shutterstock and Erisx.
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