The crypto trading firm says that institutional investors can take long and short positions on Ethereum futures which will allow them to broaden investment opportunities and manage risks more effectively.
Yesterday on May 11, a digital asset trading service based out of U.K called Crypto Facilities has announced the launch of the “first regulated” Ethereum Futures Contacts which will go live on the platform. The contracts started trading yesterday at 4 PM UK-time and allow institutional investors to either go long or short the price of Ether tokens.
Note that the contracts are completely regulated by the Financial Conduct Authority (FCA) and hence unlike trading the actual Ether tokens, there are no regulatory or custodial risks associated with it. Timo Schlaefer, chief executive of Crypto Facilities said that these regulated futures will help bring more liquidity to the Ethereum token which is currently the second-largest digital currency after Bitcoin, in terms of market-cap and also the average daily trading volumes.
Schlaefer said: “Ether is the second most liquid cryptocurrency after Bitcoin, trading in the billions of dollars daily, and we are excited to be launching ETH futures. The Ethereum network is the pre-eminent blockchain for smart contracts, and we believe this new trading instrument will attract more investors and bring greater liquidity to the marketplace.”
He further added that “Bitcoin has gone through a process of maturation as a financial asset with a futures market in the past year. And Ethereum is following a similar path this year.”
The liquidity for the Ethereum futures product will be provided by London-based market maker B2C2 and Chicago-based trading firm Akuna Capital. Akuna’s head of digital assets, Toby Allen, in a statement said that the trading firm is “looking forward to seeing this much-needed product fill a gap in the market. The addition of a futures product enables crypto traders to take both long and short positions in ETH and is another giant leap in the development of the crypto asset class.”
B2C2 founder Max Boonen also referred the launch of Ethereum futures to a “next natural step” for the launch of the digital currency. He said: “The continuing evolution and commoditization we’re seeing in Ethereum will further increase liquidity in the marketplace, enabling participants to exchange assets seamlessly and unlock value. We look forward to providing liquidity for this new product.”
However, note that this is not the first crypto futures product offering from Crypto Facilities. The U.K-based crypto trading platform already offers its customers the facility to trade futures for Bitcoin and trade Ripple’s XRP tokens. The British trading start will now be exploring ways for the greater adoption of ETH futures. Neither of the two groups – CME or CBOE who were the first to launch the Bitcoin Futures contracts in December 2017 has shown any sort of interest in Ethereum futures.
Much recently, researchers from the Federal Reserve have argued that in fact, the launch of Bitcoin futures was one of the major reasons for the crypto-market decline earlier this year as it gave the opportunity to the bears to take short positions on the digital currency. On the other hand, some analysts say that considering long-term prospectives the existence of Bitcoin futures will prove to be bullish for the market.