July 25, 20183min658

Institutional Investors Swap Bitcoin Futures for Physical BTC in Wall Street First

Bitcoin took a significant step toward becoming a mainstream financial instrument this week, as two institutional investors completed the first-ever exchange for physical (EFP) transaction involving bitcoin futures.

The CME EFP Bitcoin transaction, facilitated by E D & F Man Capital Markets, a registered futures commission merchant, and itBit, an institutional-grade cryptocurrency exchange, saw two institutional traders swap a position in CME’s bitcoin futures market for an equivalent amount of the “physical” asset itself.

Wall Street traders use EFPs to hedge their futures positions and diversify their exposure to specific assets. They may also provide firms with leverage, capital, tax, and liquidity benefits. EFP transactions are negotiated off-exchange, often with the assistance of a broker, and then reported to the exchange for settlement.

While common in commodities trading, itBit and E D F & Man said that this transaction marked the first time that an EFP has been reported to a U.S. futures exchange where the underlying physical asset was a cryptocurrency.

Commenting on the trade, Brooks Dudley, of E D & F Man Capital Markets Inc., said that it marked an important step in the maturation of bitcoin as a regulated asset:

“Every day we facilitate EFPs for our clients in physical assets such as soybeans, wheat and treasuries. EFPs on CME Bitcoin futures mark an important step forward in the maturity of the regulated derivatives market for digital currencies.”

Paul Ciavardini, director of itBit’s over-the-counter (OTC) cryptocurrency trading desk, added that institutional solutions such as EFP trades will “continue to reduce the friction” in the cryptocurrency marketplace.

The trade is also noteworthy because, the U.S. Commodity Futures Trading Commission (CFTC) has thus far only approved bitcoin futures products that are cash-settled, meaning that investors receive the cash value of bitcoin when a contract expires, rather than the physical asset itself. With the availability of EFPs, they will have more flexibility in how they interact with this nascent asset class.


About us

We are the new economy news hub. 2100NEWS is the professional index, data, and tools provider in the digital asset space, offering Crypto Market Intelligence, providing the perspective you can trust and equipping you with information edge you need to stay ahead. (Real-time data of token issuers and news, analysis and commentary from community.) We are very excited to contribute to the evolution of the industry and build an ecosystem around our offering (the institutional-grade data infrastructure required to enable institutional investments in digital assets). We want our contributions (Contents and Tools on 2100NEWS.com) to be useful for helping investors.


CONTACT US

CALL US ANYTIME



Latest posts



Newsletter


    • ethereumEthereum (ETH) $ 3,556.39 1.5%
    • litecoinLitecoin (LTC) $ 93.53 0.63%