CoinFLEX, a derivative-focused company launched last year by crypto exchange, Coinfloor has revealed that it will launch a physically backed Bitcoin futures contract next month.
A Bloomberg report confirming the development stated that CoinFLEX will be based in Hong Kong and will for a start offer futures contracts backed by the top cryptocurrencies including Bitcoin, Bitcoin Cash, and Ethereum.
Unlike existing futures contract that is not physically-delivered, CoinFLEX’s CEO, Mark Lamb confirmed that their soon-to-be-launched derivative will be settled with the underlying cryptocurrency. That is, if the contract expires, investors will be paid off with cryptocurrency rather than physical cash.
The CEO also acknowledged that while their offering will be unique in comparison to what other crypto derivative companies are offering, the market share for futures contracts will grow soon.
Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery. Volumes are reduced because of a problem of trust when it comes to cash-settled trades.
Additionally, Mark Lamb referred to the fact that futures volume in other markets are 20 times larger than it is in the crypto markets to prove that things can only get better from here.
CoinFLEX Will Operate From Seychelles
With regulatory uncertainty still surrounding the crypto industry in the U.S and Europe, Coin Futures and Lending Exchange, or CoinFLEX is set to launch in the African country of Seychelles.
Although the venture is backed by prominent Bitcoin Cash backer, Roger Ver and some top companies, it has chosen to launch in a loosely regulated environment for some reasons. Mark Lamb explained,
“In order to be a large, global exchange focused on traders, the best way to serve the market is to be offshore. Since crypto is a global audience and being regulated by one country would restrict who we can deal with elsewhere, we have chosen to be offshore in order to maximize our accessibility and the trust traders place in us.”