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While Ethereum is struggling with legal challenges in the United States, will we see Ethereum-based futures in 2019? We could only.
According to a series of questions recently released by the CFTC, the United States Commodity Futures Trading Commission, sent to respond to the public, with special emphasis on the mechanisms of ETH and the underlying appetite of the token market.
While there are traders out there who are genuinely surprised Futures of Ethereum I am something that is considered is the only real surprise. In fact, there have been a certain number of times when these futures have been considered.
The most recent example of this includes CBOE Global Markets, which expressed its opinion on their presentation in July. While this is initially awaiting consideration by the CFTC, this implies at least that some discussions have been initiated with a regulatory body.
Now, while ETH futures are not a surprise, the approach adopted by the CFTC is quite impressive – and sets an otherwise interesting precedent for the development of cryptocurrencies on the market in the near future.
Ethereum Futures up for Consideration?
This concerns a change in the role that CFTC is taking on in cryptocurrency. But it is worth looking at how likely it is to see the creation and addition of these short-term futures.
One perspective to take is this: the inclusion of derivatives based on Ethereum would offer CFTC a rare position to have an in-depth view of this market, allowing it to operate as a more effective monitoring body. Overall, this will allow monitoring of activities and prosecution of illegal activities with a much higher level of effectiveness.
While this is an incredible prospective scenario, there is another way in which this inclusion can lead to. In the past, the CFTC has strongly emphasized the importance of ensuring that the dangers of manipulation of any degree are actively fought. This means that it can also be mitigated in the cryptographic market.
Previous research conducted by an academic institution has shown that the price of cryptocurrencies like Bitcoin was subject to manipulation, both during and after the launch of the Bitcoin futures on the Chicago stock exchange.
Now, while outsiders and active investors know all too well that Bitcoin is a crypt of their own style, and Ethereum is not in terms of value in any way. In particular, its volume is only a third of the Bitcoin scale, but while this is the case, Ether is also vulnerable to the same manipulation, spike and collapse.
One of the additional risks that Ethereum the faces are the fact that the protocol of the emerging consent protocol of Ethereum is approaching. Currently, ETH uses evidence of labor consent, and any passage to the test of the gaming system has all the risk of striking its integrity substantially.
One thing that takes away the risk of a dip in the value of ETH is the fact that any change of consent will take place only after a series of tests by the community. But while this is the case – no matter how complete the test is, it can not completely eradicate the potential of something that goes wrong.
A further risk is that any commercial exchange causes a knock-on effect that affects the derivatives market, not only due to the confusion caused to the pool of investors, but also a potential peak or collapse of the level of Ethereum demand after the switchover.
The CFTC certainly has the potential to achieve a significant level of influence with its positive approach ETH FuturesBy giving it the ability to guarantee good practices, there are still some important issues that need to be considered before continuing.
Road blocks to progress
The CTFC should decide, while positive for a prospect ETH Futures market, in the end he refuses to be traded on platforms operating under his own eyes, has the power to prevent them from striking the market without his approval? One of the problems that come into the mix is the Commodity Futures Modernization Act.
Officially established in 2000, the Commodity Futures Modernization Act was responsible for creating what we now know as self-certification. This action allows trades to start trading new contracts the day after they have proven to comply with the required regulatory obligations.
This allows the CFTC ensure that fair practices are followed and at the same time ensure that trade is highly flexible in what is included in their markets.
It is really hard to imagine that there is an exchange that can showcase this type of documentation before the ETH commission for futures. This is particularly difficult to consider, especially if it is known that if the commission decides to deny this self-certification, it would be totally contrary to the previous legislation issued by the agency, according to which if a contract proves to be compliant, It is an objection that can be put into the exchange.
In January, President Giancarlo issued a statement to the community, in which he responded to the criticism regarding the rushing of the positions of Bitcoin Futures without the inclusion of the public into consideration. He argued that the rules of the self-certification process were advanced to serve as an engine for innovation, enabling the rapid implementation of new products on the market.
He added, however, that there was a review checklist, including the underlying requirements, that those exchanges participating in the self-certification process try to be more accommodating to industry responses, especially when it comes to including new products.
Now, this is where we really see a change in touch.
A more direct approach to the market
When Giancarlo took over the position of President of the CFTC for the first time in early 2017, he stated that one of the main goals he had was to increase the level of influence that the organization had on the markets it helps regulate. He had previously spoken in more positive terms about the potential for inclusion of cryptocurrencies on the market.
Following these statements, the organization then moved towards a deeper level of supervision in supporting emerging and innovative asset classes.
Instead of allowing Bitcoin Futures to be a quick quote to parallel the other certifications that are comparably much faster in terms of processing time. The CFTC had previously been in dialogue with the exchanges for a number of months before being able to launch, while it proved to be completely instrumental in improving margins and obligations such as the level of shared information.
For the future of Ethereum, however, it went far beyond what other positions are being made to pass.
When we compare what other goods or classes of goods have to go through, it is obscure to see the CFTC bring the demand to the public on the list of this crypto-asset. Although it proves arbitrary for the criptos, it demonstrates a new relationship between public and private – with much more collaboration between the two. However, this is a collaboration that is relatively open, with a period of time until February. And if the community is something to go on, they were very enthusiastic about the inclusion of Ethereum.
A collaborative initiative
As the market progresses, this cooperation has all the potential to create a new generation of stronger and more stable cryptocurrency markets, with a dedicated community, institutional support and oversight.
Having a higher level of involvement and communication from the CFTC, a much better understanding of what technology means can offer a better understanding of the effectiveness of an encrypted derivative or a spot platform. The end result of this would be a more balanced level of comfort and greater growth than any future that could be added.
Another advantage is an additional level of legitimacy that can be given to the world of cryptocurrency. This, in turn, can lead to a much higher level of institutional investment in the cryptographic activities that are subsequently included.
That will go on to create a virtuous circle of new resources, a more solid support from the community and greater traction.
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