UK Startup Crypto Facilities Announces Ethereum Futures Contracts
A startup in the United Kingdom recently made headlines after announcing futures contracts for Ethereum. Crypto Facilities says the move is the first time Ether futures will be traded on a platform that is regulated.
They tout themselves as a world leading digital currency trading platform for professionals, “offering individuals and institutions regulated, transparent, and secure trading 24/7/365.”
The company said the futures will give investors the chance to expand their investment opportunities and “manage risk more effectively” by taking long or short positions on the digital currency that fuels the Ethereum blockchain.
Crypto Facilities is reportedly collaborating with Akuna Capital and B2C2 to assist with backing the futures contracts, which are characterized by Akuna digital asset chief Toby Allen as a “another giant leap in the development of the crypto asset class.” The founder of B2C2 expressed a similar sentiment, saying how the contracts are a “natural next step” for Ethereum.
Futures contracts for virtual currencies have been somewhat of a controversial topic, but have become a popular concept as people express concerns with digital currency exchanges and hardware wallets. Bitcoin futures contracts, like ones offered from CME Group and CBOE starting last year, give investors a chance to speculate on the price of the seminal cryptocurrency without actually having to buy it.
Some believe people will be more apt to invest in this manner rather than going through the process of verifying identification on an exchange and managing an online (or hardware wallet). Cryptocurrency enthusiasts and outside institutional investors have expressed worries about the security of digital coin exchanges from hackers and thieves, and some are still a bit hesitant to trust hardware wallets.
Trading volume for the two Bitcoin futures has steadily risen over the past few months, leading to speculation the future of cryptocurrency could involve a lot more futures contracts.
However, others cast blame on CME Group for launching their Bitcoin futures late last year, saying how it was one of the main drivers for massive price dips around the same time. Many believed the launch of the two futures would rope in more institutional investors, inspire confidence, and keep sending the price of Bitcoin higher and higher.
Crypto Facilities is no stranger to the digital currency world, having already offered access to futures for Bitcoin and XRP. Company CMO Timo Schlaefer said the move towards Ethereum was due to its liquidity and its prominence in the cryptocurrency world as a blockchain for smart contracts. Ethereum is currently the second biggest digital currency according to market capitalization data.
Schlaefer hopes the Ethereum futures will bring in more investors and foster marketplace liquidity.
There’s still a solid amount of uncertainty about how the new Ethereum futures will affect the coin’s value. Current predictions say the digital currency will reach a price point of $2,500 by the end of year. But the cryptocurrency has seen recent price fluctuations amid a raid of the Upbit exchange by South Korean authorities. Others worry about the potential a Mt. Gox trustee could dump more Bitcoin into the market and affect prices.
How the introduction of Ethereum futures will factor in is yet to be determined.
CME Group also made news after launching two new indexes for tracking Ethereum on Monday, but the company says they do not have any current plans to launch futures. The indexes are (again) calculated by Crypto Facilities based on transaction data from top digital currency exchanges Kraken and Bitstamp.
Tim McCourt of CME said the focus right now was on the index itself. The format and structure of the indexes are very similar to the company’s Bitcoin futures.
According to Brian Quintenz of the Commodity Futures Trading Commission, some exchanges have also signalled an interest in listing Ethereum derivatives. But he said at the Consensus cryptocurrency on Monday how this decision is one that needs to be made carefully.
