After the success of Bitcoin futures launched by two US-based exchanges, a cryptocurrency exchange operator in the United Kingdom, called Coinfloor, is now planning to enter the market with Bitcoin future instruments, but unlike its US counterparts, it will offer the first physically delivered cryptocurrency contracts.
The London-based exchange announced the prospect on the 13th of March, with the release of an official notification. Coinfloor will launch a new cryptocurrency exchange – CoinfloorEX – which will be a dedicated exchange for cryptocurrency futures. With this new investment instrument, the company is targeting hedge funds, proprietary trading firms and sophisticated retail investors, as well as cryptocurrency miners.
With the physically settled futures, Coinfloor will deliver the actually traded asset (in this case Bitcoin) after the expiry of the contract. Chicago Board Options Exchange and CME Group both offer cash settlements and do not deliver Bitcoin to the contract’s owners. Moreover, the company is claiming that settlement via physical delivery will make the process more transparent.
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Coinfloor’s CEO Obi Nwosu commented: “Our mission is to build a bridge between Fiat currency and cryptocurrency to drive the stability and sustainability of cryptocurrency. Numerous market participants are calling on existing cryptocurrency exchanges that provide futures contracts to switch from cash to physical settlement. However, making that transition will be very difficult for them to achieve. We understood this requirement from the start, and have worked for over two years to bring this functionality to market. Now, institutional investors and traders can capitalize on market dynamics, within their own risk parameters and in line with their individual trading strategies.”
Addressing the growing concern of cryptocurrency theft from exchanges, Coinfloor will offer a 100% multi-signature cold storage cryptocurrency custody facility.
Talking to Reuters, Coinfloor co-founder Mark Lamb: “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.”
Coinfloor will be the fifth exchange in the world to launch Bitcoin future contracts and the second in the UK, as the UK-based CryptoFacilities is already offering cash-settled contracts on the island.