ErisX, the crypto derivatives provider, has been cleared by the US-based Commodity Futures Trading Commission (CFTC), which has jurisdiction over digital futures trading contracts, by giving them a license to operate crypto futures and offer contracts.
The company previously held a designated contract market (DCM) license, on the top of which CFTC cleared them for a derivatives clearing organization (DCO) license. This means that ErisX digital can now offer crypto futures products on their own. ErisX digital recently announced the news in their tweet:
Our DCO license is the next step in ErisX’s evolution & mission to improve the digital asset space. We worked collaboratively w the CFTC to establish a clearinghouse guided by proven regulatory frameworks that protect participants and market integrity. https://t.co/xHN4giM5lr
— ErisX_Digital (@ErisX_Digital) July 1, 2019
What is Crypto Futures Trading?
Futures trading is a contract or an agreement to buy a commodity (in this case, cryptocurrencies) at a future date at a fixed price. When trading in volatile markets like crypto, investors can lock in profits by hedging at existing spots while not having to actually hold cryptocurrencies. Futures can hence be used to speculate on the market price of a cryptocurrency and gain profit without holding the currency. Futures investment has been one of the best ways to minimize risk, based on speculations on whether the market would go up or down.
After gaining the DCO license, ErisX aims to launch crypto futures contracts later this year, as announced in their blog post. The press release of CFTC also announced that the clearing services for Eris (the parent company of ErisX) have been opened. Eris aims to bring these services on their exchange ErisX. A statement in the release read:
Under the DCO order, Eris will be authorized to provide clearing services for fully-collateralized virtual currency futures. Eris’ indirect parent company, Eris Exchange, LLC, is registered with the CFTC as a designated contract market.
The news of ErisX’s license comes parallel to the news of Binance’s decision to offer crypto futures trading. This news was revealed in Asia Blockchain Summit in Taipei by CZ himself in front of global brands and international media, further growing the hype of his exchange.
Binance has recently climbed the ladder of growth quite rapidly as they recently announced their own Binance Bitcoin Token (BTCB), which would unlock a series of tokens on their native blockchain which would be pegged to different leading cryptocurrencies.
Apart from this, biggest crypto exchange Binance, partnered BAM for U.S. Customers. Some notable crypto exchanges have already been trading crypto futures for a while now.
Kraken, one of the biggest crypto exchanges of the world, after the acquisition of Crypto Facilities earlier this year also opened crypto futures for their audience but as they weren’t licensed under the jurisdiction of CFTC, they couldn’t operate their services in the US. EricX, on the other hand, would have full liberty to operate anywhere in the US following their approval.