The Commodity Futures Trading Commission announced on Dec. 1 that three exchanges have certified that their bitcoin derivatives contracts comply with U.S. rules and regulations, clearing the way for these exchanges to begin trading the contracts. The three exchanges are CME Group, CBOE Futures Exchange, and Cantor Exchange. CME and CFE plan to offer bitcoin futures, and Cantor plans to offer bitcoin binary options.
In a lengthy statement explaining the process, the CFTC emphasized that the three exchanges agreed to "significant enhancements" to contract design and settlement to protect customers and maintain orderly markets. The CFTC also emphasized that it has limited authority over the underlying cryptocurrency markets and will rely on the exchanges to monitor trading in the cash markets.
In a related development, National Futures Association, the self-regulatory organization for the U.S. futures industry, issued an investor advisory on the risks of trading futures on virtual currencies. NFA said the risks include the potential for price volatility, the risks of using leverage, and attempts by "Ponzi scheme operators and fraudsters" to capitalize on interest in bitcoin.
These three exchanges are not the first to receive a go-ahead from the CFTC. In July the CFTC approved an application by LedgerX, a New York-based startup, to offer bitcoin swaps and options. LedgerX, which began trading in October, operates as a swap execution facility rather than as a futures exchange. Access is limited therefore to institutions and wealthy individuals.