CME Group, the world's biggest exchange owner, and Cboe Global Markets are set to become the first US-regulated exchanges to launch bitcoin futures contracts after they got the all-clear from the US derivatives regulator.
The Commodity Futures Trading Commission (CFTC) held "extensive" discussions with the exchanges, and CME and Cboe agreed to put "significant enhancements" in place to protect customers, including initial margin requirements of between 35 per cent and 40 per cent.
CTFC chairman Christopher Giancarlo warned that the underlying cash markets and exchanges for bitcoin were "largely unregulated markets over which the CFTC has limited statutory authority".
Giancarlo said: "There are concerns about the price volatility and trading practices of participants in these markets.
"We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts’ price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages. Nevertheless, investors should be aware of the potentially high level of volatility and risk in trading these contracts.”
CME announced the initial listing of its bitcoin futures would launch on 18 December.
"We are pleased to bring bitcoin futures to market after working closely with the CFTC and market participants to design a regulated offering that will provide investors with transparency, price discovery, and risk transfer capabilities," said Terry Duffy, CME group chairman and chief executive.
"Though we have worked through a lengthy, comprehensive process with the CFTC to get to this point, we recognise bitcoin is a new, uncharted market that will continue to evolve, requiring continued collaboration with the commission and our clients going forward."
Cboe said its bitcoin futures launch date would be announced shortly.
Cantor Exchange, a subsidiary of Cantor Fitzgerald, will also offer bitcoin binary options.
Bitcoin prices have rocketed to as much as $11,000 this week, though they dipped back down to around $9,000 yesterday in a volatile day of trading.
Following the announcement by the CFTC, bitcoin prices were up 7.43 per cent to $10,625.89, according to Coindesk's aggregate index.