Cryptocurrency exchange giant Binance is announcing today the launch of COIN- and USDT- Margined product categories for its range of perpetual and quarterly futures. The company said in a statement that the new product categories are designed to “highlight the use of Bitcoin and altcoins as the currencies for settlement.”
In other words, the new categorization aims to set cryptocurrencies on equal ground with fiat currencies. This is a move that the firm says reflects a heightened interest in futures that are “margined and settle with Bitcoin and altcoins.”
Indeed, Changpeng Zhao, the chief executive of Binance, said in a statement that the new categorization follows the fact that “our combined COIN- and USDT-margined futures volume hit a daily all-time-high of $13 billion last week.”
According to the announcement, users on Binance Futures can now select futures contracts as follows:
- COIN-Margin Futures (displayed as ‘COIN-Ⓜ’, ‘COIN-ⓜ’ on the web and mobile app respectively)
- Quarterly Futures
- Perpetual Futures (to be launched Q3 2020)
New Economic Calendar Feature Added to FBS Personal Area and AppsGo to article >>
- USDT-Margin Futures (displayed as ‘USDT-Ⓜ’, ‘USDT-ⓜ’ on the web and mobile app respectively)
- Perpetual Futures
COIN-Margined Contracts Are Based on Inverse Contracts, Which Work Well for Cryptocurrencies
While USDT-margined futures are similar to traditional standard futures in that they are margined and settled with a fiat currency, COIN-margined futures are instead settled with the asset itself. If a trader chooses the COIN-margined futures option, the contracts are margined and settled with the asset itself. For example, a COIN-margined Bitcoin futures contract will be settled in Bitcoin.
Binance says that these COIN-margined contracts are based on ‘inverse’ contracts, which are popular in crypto finance because of cryptocurrencies’ instant and fungible nature. In a more traditional financial setting, inverse contracts may be considered counterintuitive.
Indeed, Changpeng Zhao commented, “unlike with traditional markets, ‘inverse’ cryptocurrency contracts are intuitive because of the nature of digital assets.
“There are also traders who use coin-margined futures to hold cryptocurrencies for the longer term,” he added, “We should embrace these facts, as it helps strengthen our industry’s standing.”
The announcement of the new categorization closely follows the launch of a new type of options contract for Binance Coin (BNB) earlier this week. Binance Options previously listed its first BNB contract in April of this year.