Despite the seismic decline in the price of Bitcoin units recently, the second largest stock exchange in the world – the Nasdaq – plans to launch a future Bitcoin product in the coming months.
sources close to the company spoke with Bloomberg, suggesting that the US stock exchange has been in talks with the Commodities and Futures Trading Commission (CFTC) in order to obtain regulatory approval to operate a compliant cryptostate based futures market .
In January, Adena Friedman, CEO of Nasdaq, confirmed in a interview with CNBC, the company was investigating Bitcoin futures in order to offer the product, while creating a certain differentiation from existing offers provided by rivals, the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE).
"What we could look at is more than a future of total return, so it's a bit different." This seemed to suggest that the Nasdaq is looking at a product that differs from its competitors in that it would rather track the spot rate of any future price. She added:
"Will we have to see if it makes sense at the end of the day, proper customer demand, and on a risk management aspect?" Do we feel confident? "In which case we would try to go to the CFTC."
It would seem that the Nasdaq feels very safe in terms of risk management and perceives that there is sufficient market demand for such a product, as it has advanced to speak with the CFTC.
The immediate response of the community through social media has been mixed. Many fear that if this is not a physically stable product, it will not be good for cryptocurrency and could have a detrimental effect on the price of Bitcoin. This view has been expressed by many in reference to the non-physically existing Bitcoin-based futures markets provided by the CME and the CBOE.
However, founder of Arturo Capital, Rick Fiebiger – the manager of a hedge fund specializing in emerging blockchain protocols – expressed the vision on Twitter that these concerns are misplaced:
"Here are all the comments on how & # 39; Nasdaq is the worst thing ever for crypto, means that the bankers will encrypt to death! & # 39; … not realizing that Bitcoin Futures is the first step to list more encrypted financial products, and soon, encrypted themselves. "
CME and CBOE have launched the first Bitcoin futures products near the peak of the encrypted market towards the end of last year. Trade was mostly largely between the cryptocurrant bear market which led to a significant erosion of unit prices in 2018.
Bakkt, a new futures trading platform established by the Intercontinental Exchange (ICE) – owners of the New York Stock Exchange (NYSE) – should also be launched in 2019. Initially, trading is expected next month , recently Bakkt delayed launch to prepare sufficiently to facilitate the new market.
The cryptocurrency community has been more receptive to the arrival of Bakkt on the basis that it implies the physical regulation of Bitcoin futures contracts – something that is considered far more valuable to the industry. However, even in this case there have been concerns expressed about the industry implications of this product offering.
Caitlin Long – a 22-year-old Wall Street veteran and CEO of the corporate blockchain company, Symbiont – suggested that Bakkt has not made it completely clear that he will not engage in practices that would see cryptocurrency and digital resources being parceled out in such a way as to result in fractional confidential operations.
During 2018, we also witnessed efforts to introduce funds traded on a cryptocurrency stock exchange (ETF). Despite repeated applications, the Securities and Exchange Commission (SEC) has continually rejected these applications. The candidates included ProShares, Direxion, Winklevoss Bitcoin Trust, VanEck and GraniteShares. The SEC has repeatedly stated that at present, applicants can not demonstrate compliance in terms of consumer protection when it comes to fraudulent activity and market manipulation.
An SEC Commissioner, Hester Pierce, publicly expressed his disapproval of the rejection of the commission of a Bitcoin ETF proposed by Winklevoss Bitcoin Trust in July. Appearing on the "What did Bitcoin" podcast over the weekend, Pierce suggested that while a Bitcoin ETF is not inevitable, it is certainly possible in the coming months. He clarified that the SEC adopted a prudent approach to cryptocurrency and, rightly, when it comes to ensuring that any scams associated with the industry do not filter at the expense of consumers. However, he also said that a balance needs to be found so that innovation is not stifled.
There is a certain degree of uncertainty in the cryptocurrency market at this time given a bearish market for the duration of 2018. That negative sentiment has been further accentuated due to a significant fall in cryptocurrency prices over the last 2 weeks. However, there are also reasons for optimism. Week by week we have seen announcements of important players in the world of conventional finance from Goldman Sachs, Fidelity, ICE and others in terms of investments in the cryptocurrency sector. The infrastructure is put in place to facilitate institutional investments. There are short-term challenges in the cryptocurrency sector, but there seems to be a potential medium / long-term resurgence based on these announcements – along with the Nasdaq's decision to enter the market.