The President of the Chicago Board Options Exchange (CBOE), Chris Concannon says Ethereum futures could be available soon, following a decision from the Securities and Exchange Commission (SEC) that Ethereum won’t be regulated as a security.
The CBOE President says this decision gets rid of a major stumbling block that was hindering the path towards legally operating an Ethereum futures exchange, and that he is pleased with the SEC for making this clarification. Apparently, CBOE has been thinking about offering Ethereum futures trading since it first launched its Bitcoin futures exchange in December 2017. Bitcoin and Ethereum are the top 2 cryptocurrencies with market caps of 112 billion USD and 50 billion USD respectively as of this writing, 57% of the total cryptocurrency market cap of 281 billion USD.
The SEC provided some guidance for when cryptocurrencies can be defined as securities and when they do not meet the criteria. The Director of the Division of Corporate Finance at the SEC, William Hinman, said that any cryptocurrency which is sufficiently decentralized so no individual or organization is controlling it wont be considered a security. He explicitly stated that Ethereum is not a security and therefore is not under the jurisdiction of the SEC, making Bitcoin and Ethereum the only cryptocurrencies that have been given an all-clear by the SEC.
Ethereum prices rose from 480 USD to 520 USD following the SEC decision, and have since leveled off near 500 USD. The SEC decision is very positive news for the cryptocurrency world since now individuals and exchanges can trade Ethereum in the United States without an SEC broker-dealer license.
Bitcoin futures have been popular among institutional investment firms like Susquehanna International Group and may provide an avenue for institutional money to enter the Ethereum market. However, there is some concern that Bitcoin futures contract trading has damaged the market via manipulation, and that this same sort of manipulation could become an issue for the Ethereum market.
Bitcoin futures contracts can be used to short sell the market, where investors bet on the market going down and get more profit the lower the market goes. Thomas Lee from Fundstrat Global Advisors says investors might be selling lots of Bitcoin to crash the price in order to increase profits from their short positions. If this is true then the same sort of damaging manipulation would be possible on the Ethereum market after future contracts launch on CBOE.
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