Upcoming Crypto Exchange ErisX Receives CFTC Approval for Bitcoin Futures

The U.S. Commodity Futures Trading Commission (CFTC) has granted upcoming cryptocurrency exchange ErisX a license approval to offer futures contracts.

ErisX – backed by U.S. brokerage TD Ameritrade – announced that the CFTC has granted a derivatives clearing organization (DCO) license, serving as a secondary approval on top of an existing designated contract market (DCM) license, which the exchange had already held.

“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,” reported a CFTC press release.

Following the announcement, the company can now launch crypto futures products under the authority of the U.S. regulator.

Although no definite timeline has been provided, the news further reports that it will launch its futures contracts later this year. The future contracts will be physically-settled, meaning customers receive real Bitcoin and not the cash equivalent. In addition to that, ErisX will also certify its futures contract market participant rules prior to launch.

CEO Thomas Chippas has stated that the company is unique because it divided the trading and settlement functions using traditional DCM (exchange) and DCO (clearing) models.

He further added that it reflected the structure that institutional investors expect from other asset classes and will help drive these markets toward greater relevance and accessibility.

Apart from its DCO approval, ErisX received no-action relief from the CFTC for certain aspects of its offering. Primarily, the CFTC Division of Clearing and Risk granted ErisX relief from aspects of Part 39 of the Code of Federal Regulations Title 17.

Companies apply for no-action relief when they believe their product can fit the spirit of the law, but not necessarily the letter. When no-action letters are granted, the applicants must adhere strictly to the list of requirements laid out within.

Meanwhile, ErisX’s approval comes a week after competitor LedgerX received its own DCM license. Likewise, LedgerX has yet to announce a definite timeline for the launch of its bitcoin futures contracts.

Other exchanges such Bakkt – subsidiary of NYSE parent firm ICE – and Seed CX, a US crypto derivatives provider, are planning as well launching their own physically-settled bitcoin futures soon. Bakkt is currently awaiting a trust company license from the New York Department of Financial Services.

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