ErisX is a Nasdaq and Fidelity investment backed US-based digital asset exchange which in reply to the US Commodity Futures Trading Commission (CFTC) question on the current Ethereum market has said that the introduction of a regulated futures contract on Ether would have a positive impact on the growth and maturation of the market.
ErisX is a newly formed crypto asset exchange which garnered over $27.5 million in investments. The ErisX is looking to work closely with the regulators at CFTC and has sought their approval back in December 2018 to list cryptocurrency futures at a later point this year. ErisX started to offer Bitcoin, Litecoin, and Ether as a spot trading options and they were planning to introduce Ethereum based future contracts.
Why Regulated Ether Future Contracts Are Important
ErisX believes that a well-regulated Ether future contract can help to bring in “open, transparent, competitive, and financially sound derivative trading markets.” in its letter to the CFTC over why Ether Future contract can play a crucial role, the letter notes that the regulated crypto future would “prohibit fraud, manipulation, and abusive practices in connection with derivatives and other products subject to the (Commodity Exchange Act) CEA.”
The CFTC noted that Bitcoin can be considered as a commodity since it is being pegged as an entity of financial exchange which is supposed to replace fiat at some point. Since Bitcoin and ethereum are decentralized, they cannot be termed as Security.
In its letter to the CFTC, the ErisX explains the difference between Bitcoin and Ethereum protocol,
Ethereum built upon some of the architectural principles of Bitcoin to extend [its] functionality of [a] distributed, (cryptographically) secured, (blockchain-enabled) record-keeping system to include new computational capabilities for the execution of arbitrary code.
ErisX Says That Regulation is the Key to Stabilize the Market
As per the analysis done by the exchange, the current Ethereum and digital market, in general, suffer mainly due to the absence of a proper regulatory framework. This has prevented large enterprises and institutional investors from entering the fragile crypto space.
The letter notes,
Not unique to Ether, but [current crypto markets could suffer due to] the current fragmented global market structure of trading platforms and ‘exchanges’ with significantly varying degrees of regulatory oversight and operational transparency and integrity.
ErisX believes that if CFTC and crypto space works in correlation, the crypto space would benefit hugely and the outlook towards the crypto market would change. The CFTC regulated Ether Future contracts can bring in many institutional investors along which could potentially lead to a more robust and resilient future.