CoinFLEX, a derivative focused company, has planned to launch a physically backed Bitcoin futures contract next month.
CoinFLEX was launched by Coinfloor Exchange last year. Coinfloor is the longest established institutionally focused cryptocurrency spot exchange and OTC desk in the UK. It rebranded the company from CoinfloorEX to CoinFLEX.
The operations of the newly launched company will be based out of HongKong. The company will be offering futures contracts which would be backed by the top crypto coins including Bitcoin, Bitcoin Cash, and Ethereum.
Mark Lamb, CEO of CoinFLEX, has confirmed that the derivatives they are planning to come up with will be settled with the underlying cryptocurrency. This means when the contract expires, investors will be paid the amount they invested in form of cryptocurrencies instead of physical cash.
“Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery. Volumes are reduced because of a problem of trust when it comes to cash-settled trades”.
He also stated that the futures market in the other industries is 20 times bigger than the crypto-market.
Regulatory problems in the US and Europe has led CoinFLEX to establish its roots in the African country of Seychelles.
The venture is managed by prominent Bitcoin Cash backer, Roger Ver and some top companies but still prefer to work in a less regulated environment.
“In order to be a large, global exchange focused on traders, the best way to serve the market is to be offshore. Since crypto is a global audience and being regulated by one country would restrict who we can deal with elsewhere, we have chosen to be offshore in order to maximize our accessibility and the trust traders place in us.”
CoinFLEX’s success in future contracts will be challenged once Bakkt Bitcoin Futures comes into the market. It will be launching later this year by the Intercontinental Commodities Exchange (ICE) and Nasdaq.
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