Futures investment has been one of the best ways to minimize risk, based on speculations on whether the market would go up or down. 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 gaining profit without holding the currency, how cool is that?
Kraken, one of the largest crypto exchanges of the world, recently contributed to bringing crypto futures to the mainstream by announcing their acquisition of Crypto Facilities. This $100 million acquisition is said to be one of the biggest acquisition in the history of crypto, which sure brought futures trading to the platform, but people from the US cannot access this facility as of yet.
The US stands high as one of the most populated areas in terms of crypto investors, in line with China, Switzerland, Sweden etc. According to research, 53% of the Bitcoin users are either from North or South America. Although Kraken claims that they have made one of the biggest acquisitions in the history of crypto, the acquisition still doesn’t facilitate the huge market of the US and certain other areas.
Crypto Facilities is a London based crypto trading and index provider firm. It was the first regulated firm to offer futures trading on Bitcoin, Ethereum, Ripple XRP, Litecoin and Bitcoin Cash. The firm is FCA regulated. The jurisdictions of Financial Conduct Authority (FCA) lie within the UK which is the reason for the trading not being available for the US citizens. Team Kraken further told BlockPublisher,
US residents are not eligible because Kraken Features (Crypto Facilities) is regulated by the UK FCA, not the CFTC. Should that change, US residents will be able to trade Kraken Futures.
Much like FCA, CFTC (Commodity Futures Trading Commission) is the body that overlooks the Futures trading of commodities in the US. If regulated by CFTC, Kraken would be able to bring Futures trading to US. The United States might have no regulated ETFs for Bitcoin, as they lie under SEC’s domain and they’re still unsure of the security of Bitcoin because of the fraudulent and manipulative activities happening within the space. As for CFTC, they have regulated Bitcoin Futures already and are available for trade on CME and CBOE. Crypto Facilities being London based, is regulated by FCA and might see difficulties for trade in US.
On the brighter side, Kraken has started climbing the ladder of success and improvement by this newly introduced feature by the acquisition. The partnership of both companies now promises new horizons to be opened for Kraken. The CEO of Kraken is very excited and positive relating to the acquisition and promises that Kraken, combined with the expertise of Crypto Facilities, would open new areas of interest for investors. He stated in a recent blog post,
I’m thrilled to welcome the Crypto Facilities team into the Kraken family. We are excited to introduce eligible clients to these industry leading futures and index products. Over the coming months, our teams will continue to enhance and expand these offerings. We’ve got great stuff in store for traders and institutional clients in 2019.
Regarding the acquisition and the regulatory condition of Kraken after the acquisition, Teresen Chick from Crypto Facilities explained,
Acquiring Crypto Facilities does not affect Kraken’s regulatory position. Crypto Facilities will remain a standalone FCA-regulated entity, meeting the requirements of local and European regulators. Kraken continues to comply with all applicable regulations in a variety of jurisdictions worldwide. Overall, the transaction represents an opportunity to create a platform for derivatives innovation in the cryptocurrency markets which will spur growth, reduce price volatility and enhance market efficiency and transparency.
This isn’t the first time Kraken has acquired a company. Previously, Kraken acquired major Bitcoin exchanges Coinsetter, Cavirtex and CleverCoin; the award-winning wallet funding service Glidera; and the popular multi-exchange charting, trading and portfolio tracking platform Cryptowatch.
Not only has Kraken helped its customers from the new facilities, but they have also recently improved their interface for better customer experience. With the leading crypto exchange on a run, it is expected that the futures trading facilities would soon be regulated under CFTC and the crypto derivatives’ trading would open up to the huge market.