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CFTC Approves Bitnomial Platform for Bitcoin Futures


Key Points

  • In order to clear margined digital asset futures and options, Bitnomial, the first cryptocurrency-native exchange with US derivatives exchange, clearinghouse, and broker licenses, obtained a US clearinghouse license from the CFTC.
  • Bitnomial’s unique collection of licenses, which also includes an exchange license (DCM) and a brokerage license (FCM), is completed with this clearinghouse license (DCO).
  • Two Democratic commissioners, two Republican commissioners, and one Democratic commissioner who cast one dissenting vote all supported the firm’s application.

CryptoCaster Quick Check:

The request to operate as a licensed clearinghouse for bitcoin futures by a Chicago-based brokerage and exchange was authorized by the U.S. Commodities Futures Trading Commission (CFTC) on Wednesday.

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Trading in Bitcoin futures is approved by the CFTC

As the first and only cryptocurrency-native exchange to possess all three US derivatives exchange, clearinghouse, and broker licenses, Bitnomial, a US-regulated digital asset derivatives exchange, was granted a US clearinghouse license today to clear margined digital asset futures and options contracts.

In addition, Bitnomial is the first exchange in the US that provides physically deliverable, margined digital asset derivatives, allowing users to actually possess digital assets instead of just receiving a payout in cash at settlement.

Under the federal supervision of the US Commodity Futures Trading Commission (CFTC), Bitnomial is now able to meet the specific requirements of digital asset traders, brokers, and dealers throughout the derivatives industry thanks to the addition of this clearinghouse license (DCO) to its existing license set, which also includes an exchange license (DCM) and a brokerage license (FCM).

Our aim is to introduce a global derivative trading platform, regulated in the US, that marks a pivotal shift from traditional USD and Treasury margin collateral to incorporating digital assets as collateral as well. This change is intended not just for crypto trading but also for a broad spectrum of physical and digital commodities.

While Bitnomial Exchange has been live with margin digital asset trading since late 2020, we’ve been quiet about our broader strategy while working behind the scenes to prepare for our larger business deployment.

Unlike other businesses that have attempted to disintermediate the brokerage industry, our FCM offers wholesale digital asset-related services and support to our brokerage partners, institutions, and dealers. Now that the licensing process is complete, we can shift our focus to expanding Bitnomial’s product offering and customer base.Luke Hoersten, Founder and CEO of Bitnomial

Bitnomial, an exchange that was established in 2014, has approved the scheme, signifying that the CFTC has for the first time approved a vertically integrated market structure. Two Democratic commissioners, two Republican commissioners, and one Democratic commissioner with one dissenting vote all voted in favor of the firm’s application.

Crypto community gains victories

The approval by the CFTC is also a win for a contentious business. In November, Binance, the biggest cryptocurrency exchange globally, consented to pay over $4.3 billion to resolve allegations made by the US that it had broken anti-money laundering regulations. Former CEO Changpeng Zhao may spend up to 18 months behind bars. FTX founder Sam Bankman-Fried was previously found guilty of fraud by a jury.

A number of agencies, including the White House, have condemned vertical integration in the cryptocurrency industry for raising the possibility of conflicts of interest.

Government organizations must contend with a sector of the economy that is prepared to use the legal system in the event of a crisis. An events betting platform sued the CFTC last month for turning down its plea to let investors wager on US elections.

Rostin Behnam, chair of the CFTC, stated, “We have to apply the rules fairly and equally to all registrants,” after voting in support of Bitnomial’s application. “Otherwise, that strikes me as a horrendous neglect of duty and a very concerning direction for government.”

A strong US regulatory environment supports the growing institutional interest in the US as a hub for physical digital asset exposure, as evidenced by the recent jump in the price of Bitcoin and the expected launch of a spot Bitcoin ETF.

The need for physical Bitcoin futures trading will rise as a result of the spot ETF’s direct exposure to the price of Bitcoin. This will encourage the growth of derivatives as tools for managing Bitcoin inventories and other trading strategies inside a regulated framework. The Bitnomial CEO concludes by promising transparency, saying:

We would like to thank CFTC Chairman Behnam, the Commissioners, and especially CFTC DCR staff for their coordination and hard work throughout the licensing process. The CFTC is vital to the growth of the digital asset industry globally and we look forward to continuing our collaboration as we build a safe, transparent, and innovative digital asset derivatives market in the US

Luke Hoersten, Founder and CEO of Bitnomial

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