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Why is bitcoin futures allowed when bitcoin is unregulated?

  1. Futures are regulated. Bitcoin is unregulated. So, how can bitcoin futures be allowed by the regulators? The underlying is unregulated, so how can the derivative be regulated?

    I simply cannot understand how this can be allowed. I can't put a finger to it but I don't have a good feeling about bitcoin futures. What are the dangers posed or have bitcoin reach mainstream since futures are going to be available?
     
  2. Banks are unable to offer bitcoin trading due to KYC rule. There are a few counties that do require identification when opening a wallet, however this is "recent".

    Your normal arbitrage model is skewed to the sell futures and buy BTC. I dont think you can do it the other way round, unless you can borrow BTC.

    It is all very odd.
     
  3. learner88
    The "underlying" is a based on a real time index with an end of day Reference Rate. It is also cash settled. Going to be crazy the 1st week.
     
  4. The real reason is, the greedy bastards want to capture the fees.

    They also allowed massive obvious fraud in the pinks sheets for decades for the same reason.
     
  5. Index of what? A manipulated con game?

    Why not .
     
  6. This is completely one sided, since you can short the underlying (BTC). This is the prefect tool for HFT capturing the arbitrage spreads. Who ever has the fastest connection has the advantage.
     
  7. Volatility is unregulated. Yet there are regulated volatility futures.

    The underlying doesn't need to be regulated or physically exist.
     
  8. I agree and my thoughts go to how will they deal with extreme bitcoin value gyrations? If futures, you have a "Limit Down" threshold where the market closes and trading stops at -20%. If bitcoin drops to -20%, the futures market has no control over the actual index, so if they freeze trading, bitcoin will still be active to move down below 20%. This would force futures holders to watch while being locked out of trading or exiting. Are they making the derivative free from Limit Down restrictions and have it trade around the clock?

    I'm really curious how they are going to manage shorting without putting the brokerage at risk in case of a runaway market/huge gap up. I suppose with longs, 100% margin will be required.
     
  9. Limit-down risks are worth bearing in mind when trading bitcoin futures. If bitcoin futures goes limit-down for 3 consecutive days, the traders are going to lose sleep for 3 days. You can't get out even if you want to. You can't sleep even if you want to.
     
  10. This is a good point, but, and there is always a but....

    Volatility is a simple calculation and can not be banned or manipulated (I assume). So is the weather futures. Not true with cryptos. What happens if the US government outlaws bitcoin as currency?(but not as investment, as Chine did) What if they completely outlaw it so you can't even own it in the US? Will the futures cease to exist? Until the US government takes an official stand on cryptos in general, the introduction of futures is premature. But they want to collect commissions.

    TL; DR: not all non-physical futures are equal...
     
  11. This just tells me that the govt is averse to the idea of outlawing bitcoin: first regulated exchange coinbase, now futures. I guess it's better to tax it than ban it completely.
     
  12. Even though it's unregulated there's integrity of the whole market and system due to the underlying technology, its design, the number of participants (investors, exchanges), number of coins in circulation, level of volume traded and government oversight.
     
  13. There’s absolutely no difference between BTC spreads and what HFT does in the markets.
    Pay for the fastest feeds and co-location and you automatically win.
     
  14. %%
    Well BAC is for it, in the sense that should damp down volatility. LOL I'm more inclined to agree with IB founder WSJ ad , bit con, i mean bit coin, has no fundamental value.History maybe a help, people paid $ 8,000 for pineapple early=not a pine or apple LOL. But it looked like pinebark + sweet........LOL
    I paid $00.98 for a huge can of pineapple, chopped up.Glad to see Chicago get in it; not a prediction + I AM NOT saying bit con is worth 00.98. I see my copper dealer is paying $5 for a JFK $00.50 silver coin, but some value that like what PT Jones names ''fine art'' LOL
     
  15. Forex trading is not regulated either btw. Yet you have regulated forex futures.
     
  16. The U.S futures exchanges, clearing merchants, brokers and platform providers are losing just too much business to the crypto market so on this rare occasion they're willing to bend a few rules in the name of profit.
     
  17. CFE Bitcoin update. The margin requirement from the CFE will now be 44% of the daily settlement price. It is basically a moving target as it was lower before. Wedbush will allow trading in this but at 2X the CFE requirement. BTW, the CFE Future is for one Bitcoin and the CME will be for 5! I have no margin information for the CME yet,

    I'm getting a number of requests for information.

    Bob
     
  18. A margin requirement that changes daily. Walking on eggshells comes to mind.
     
  19. at 45% margin or 2X that, all they are doing is stealing the flow from the dedicated bitcon exchanges.

    It's all out war against those usurpers
     
  20. I just still don't understand how to manage the extreme volatily during the weekend.

    Cryptocurrencies are traded 24/7 on the main exchanges like bitfinex, kraken, GDAX ....

    I think there will be a monster volatility on Friday in the last 10 minutes...
     
  21. BTW, it looks like the CFE will wave clearing fees for December. You will still have to pay the OCC fee.

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