Chicago-based CBOE Holdings, the largest US options exchange, today announced that it has secured a multi-year exclusive license from Gemini Trust, the bitcoin exchange created by Tyler and Cameron Winklevoss.
The deal allows CBOE to use Gemini’s market data, including its daily bitcoin auction values, to list and trade bitcoin derivatives products, with other digital currency contracts expected to follow.
Pending regulatory approval by the CFTC, the firm plans to launch cash-settled Bitcoin futures by the end of this year or early 2018. The deal also gives CBOE additional rights to roll out further cryptocurrency derivatives based on Gemini market data, and to distribute its market data over the exchange’s feeds.
Should the company secure the authorities’ permission to operate as a regulated venue for derivative contracts settling in digital currencies, it will open the market up to a much larger customer base who are currently unable to participate in the Bitcoin market due to compliance restrictions.
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While a notable milestone, the move comes a few weeks after the CFTC granted blockchain startup LedgerX its official registration as a derivatives clearing organization (DCO).
As for the Gemini’s creators, the twins are early investors in Bitcoin and have been highly bullish on its future value. They proposed an exchange traded fund (ETF) that would track Bitcoin prices, allowing investors to gain exposure to bitcoin on a fully regulated venue. However, the US Securities and Exchange Commission (SEC) denied their application earlier this year.
Ed Tilly, CBOE Holdings CEO, commented: “CBOE is not only a home to options, derivatives and the VIX but also ETF innovations and foreign exchange. This makes us the natural choice for the development and trading of bitcoin futures. We very much look forward to responding to the growing interest in cryptocurrencies through the creation of bitcoin futures traded on a regulated derivatives exchange, with the many expected benefits that this brings, including transparency, price discovery, deep liquidity and centralized clearing.”
Tyler Winklevoss, CEO of Gemini, added: “Gemini’s key concerns in the cryptocurrency ecosystem have always been security, compliance, and regulatory oversight. By working with the team at CBOE, we are helping to make bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors.”