London-based crypto exchange CoinfloorEX, plans to relaunch their services as a spin-off and rebrand its business name as CoinFLEX. This new exchange has plans to launch physically delivered cryptocurrency futures.
Offering leverage up to 20 times, these derivatives will become available during February to its main intended market audience, Asian retail investors.
During an interview with Bloomberg, Mark Lam, CEO of CoinFLEX, says the platform will be offering Bitcoin, Bitcoin Cash, and Ethereum.
This upcoming exchange will have to battle it out with other competing cryptocurrency platforms such as Bakkt and ErisX, who are currently the front-runners when it comes offering physical cryptocurrencies. Bakkt, itself is one of the newer exchanges that appeared during last August and has plans to offer physically settled Bitcoin futures.
ErisX also plans to launch a derivatives exchange and clearing organization that brings together digital asset futures and spot contracts onto a single, fully regulated platform.
Furthermore, CoinFlEX will also have to compete against BitMEX, the world’s largest crypto future exchange. Based in Hong Kong, BitMEX has managed to gain a hold of loyal traders, as it offers 100 times leverage on multiple crypto future contracts.
Mark Lamb had this to say,
“I’ve been in the market for six years, so seeing this kind of 80% correction is really nothing new. Bear cycles in crypto can go on a long time but ultimately, this is an asset class that it is one of the most fascinating, volatile – which is great for traders – assets in the world. And it’s really exciting because it has the potential to become one of the major currencies in this world.”
Lamb elaborates on why he believes CoinFLEX physically-settled futures will gain advantage over its competitors.
“If you’re trading a cash-settled future, you’re open to manipulation of the index at the time of settlement. If you’re a market maker where you’re doing a basis trade, where you’re arbitraging the cash and spot markets, the cash markets versus the futures market, what you really want to be sure about is, at the time of expiry, you know exactly what you’re going to get…
“With a physically-delivered future, it really ties the future’s price to the actual, underlying asset because at expiry, everyone knows what they’re going to get. Everyone who’s short, delivers Bitcoin, receives cash. Everyone who’s long, delivers cash, receives Bitcoin. So that kind of tying down to the real world allows these types of futures to be used for much more than just speculation. They’re great speculative tools, but they become useful for commercial hedging, hedging miner exposure, hedging and OTC trade, or making markets.”
Lamb states that the Asian-based crypto future exchanges will become one of the most dominated spaces in crypto history, since US-based exchanges such as Bakkt, have to deal with US regulators.
“We think that that’s likely to continue because the US is trying to clamp down on the leverage offered by these futures, and also, the time duration offered by these futures contracts.”
Clearly this is something that traders want to deal with.
“If you’re trying to deal with a global audience versus one country or one region, it’s a very different picture. If you do end up getting regulated by one regulator or one jurisdiction, or one nation, you’re actually limiting the amount of exposure and the amount of outreach you can have to the rest of the global audience. So we’re really excited about being a global, large, scalable crypto derivatives exchange, and for that approach you need to be off shore.”