Cryptocurrency Futures Exchange Launched By Coinfloor

Announcements, News | March 16, 2018 By:

British cryptocurrency exchange Coinfloor has announced the launch of CoinfloorEX, a cryptocurrency futures exchange.

Founded in 2013, Coinfloor, which includes the closely held Chicago-based proprietary trading firm DRW among its investors, runs the largest UK-based cryptocurrency spot exchange in London and another spot exchange in Gibraltar.

The company said that CoinfloorEX will offer “physically delivered” cryptocurrency futures contracts, which will protect investors and traders against price slippage on positions at time of settlement, as well as market manipulation concerns.

“Settlement is based on physical delivery rather than an index price from across other exchanges, which provides maximum pricing transparency,” the company said. “Access to Coinfloor’s spot exchange enables investors to easily convert bitcoin to fiat currency post-physical delivery, creating opportunities for longer-term currency appreciation or through meeting bitcoin-denominated obligations.”

CoinfloorEX is aimed at commercial traders generally; hedge funds, proprietary trading firms and also a select group of retail investors, as well as cryptocurrency miners. The first physically delivered contract will launch next month and will be for physical delivery of bitcoin.

Coinfloor’s CEO Obi Nwosu the goal is is to build a bridge between fiat currency and cryptocurrency to drive the stability and sustainability of cryptocurrency.

“Numerous market participants are calling on existing cryptocurrency exchanges that provide futures contracts to switch from cash to physical settlement,” said Nwosu. “However, making that transition will be very difficult for them to achieve. We understood this requirement from the start, and have worked for over two years to bring this functionality to market. Now, institutional investors and traders can capitalize on market dynamics, within their own risk parameters and in line with their individual trading strategies.”

Coinfloor co-founder Mark Lamb said CoinfloorEX came in response in part because of demand from some of the exchange’s customers.

“When you talk to the liquidity providers, they all say the same thing, which is they want a physically delivered futures contract so they can hedge their exposure across exchanges,” Lamb said.

CoinfloorEX will be the fifth exchange in the world to launch bitcoin future contracts, joining Bitmex, CryptoFacilities, CME Group and the CBOE. The future contracts being offered by CryptoFacilities, CME Group and the CBOE are all cash settled, meaning the actual cryptocurrency does not change hands.

“Many proprietary trading firms and large investors have voiced concerns that the cash-settled process can be manipulated too easily, as bad actors can attempt to move the price of the indexes or auctions on spot exchanges that set the futures prices in their favor,” Lamb said.