The Chicago Board Options Exchange (CBOE) President Chris Cocannon has stated that as a result of the SEC’s recent decision that Ethereum is not a security, the Exchange is now open to the possibility of trading ETH futures.
Speaking earlier in the week, Concannon revealed that the CBOE, which has been interested in the ETH Futures market since December 2017 may likely begin to offer ETH Futures contracts alongside Bitcoin Futures contracts which are already traded on the Exchange.
Working the same way as a typical commodity futures contract, a cryptocurrency futures contract is an agreement to buy a certain amount of the crypto asset at a fixed price and pay for it at an agreed later date. Investors thus get the opportunity to bet on the future of the cryptocurrency using short and long bets. Most existing commodities that have any sort of large-scale trade mechanism almost invariably go through some kind of futures contract, and of late cryptocurrencies have become the latest commodities to engage with the market this way.
The SEC’s announcement that it will not classify Ethereum as a security has been expected to result in positive market movements for the cryptocurrency. This would seem to be the first of the anticipated flurry of activity as its exemption from the stringent rules of the SEC’s Regulation D framework for securities makes it a preferred destination for cryptocurrency investment. Prior to the decision, a considerable amount of uncertainty existed in the crypto market regarding potential regulatory action, but these fears seem to have been allayed.
Speaking about the CBOE’s reaction to the SEC’s regulatory stance on Ethereum, Coinstabber said:
“We are pleased with the SEC’s decision to provide clarity with respect to current Ether transactions. This announcement clears a key stumbling block for Ether futures, the case for which we’ve been considering since we launched the first Bitcoin futures in December 2017.”
A New Ethereum Price Rally?
It will be recalled that in December 2017, following the announcement from the CBOE introducing Bitcoin Futures trading in what was a global first, the price of BTC experienced a record-breaking price rally that saw it rise by more than $1,800 in just a few hours, temporarily inundating the CBOE trading platform with so many BTC trades that it briefly went down.
Since that initial BTC Futures contract expired in January 2018, the CBOE has successfully launched several similar Futures which have all been in heavy demand. The trades have become so popular that bitcoin market movements are now regularly driven by the expiration of BTC Futures contracts, as was the case with Tom Lee and the recent Bitcoin price dip.
It is expected that the introduction of Ethereum Futures contracts will have a similarly profound impact on the market price of the world’s most popular altcoin as it continues its battle for supremacy with Bitcoin.
Following the positive pronouncement on Ethereum’s status by SEC Corporate Finance Director William Hinman at the Yahoo Finance All Market Summit on Thursday, Ethereum prices reportedly jumped 10% to about $520.
Featured image by GEOMETRIC