As the U.S. bitcoin futures market reduced price volatility and gained the participation of institutional investors and the market’s trust, there were voices that it was necessary to introduce the bitcoin futures market in Korea as well.
At the’U.S. Virtual Asset System and Financial Institution Trends’ presentation jointly held by Democratic Party lawmaker Kim Byeong-wook, CoinDesk Korea, and Korea Blockchain Association on the 19th, attorney Jong-soo Yoon (Law Firm Plaza) said, ‘ He said this through a presentation on the subject’Situation’.
Futures are standardized contract terms under which underlying assets or money calculated by various indices are delivered at a specific time. Depending on the settlement method, it is largely divided into △real takeover method and △cash payment method.
Taking a bitcoin futures product as an example, real bitcoins are exchanged in the real takeover method, but the cash settlement method allows you to trade without the bitcoins you hold. The Chicago Options Exchange (CBOE) and Chicago Merchandise Exchange (CME), the leading U.S. Bitcoin futures markets, are cash settlement methods.
Attorney Yoon explained, “In the cash settlement method, there is no demand in the market because the spot does not actually move, but on the contrary, because the transaction is carried out even if there is no spot, a speculative tendency may appear.”
US CFTC approves bitcoin futures in 2017
CBOE opened the Bitcoin futures market on December 10, 2017, and sold futures products as a bitcoin futures index based on Gemini, a cryptocurrency exchange in the United States. However, in March 2020, it was pushed by CME and stopped selling bitcoin futures products.
CME began selling its first Bitcoin futures product on December 18, 2017, later than CBOE. CME uses futures indicators that reflect the bitcoin market price from four exchanges, including Bitstamp, GDAX, Kraken, and itBit, and the Ether futures market on February 8th. It is about to be released.
On the other hand, some places have adopted the real takeover method in which bitcoins move when trading futures. Representatively, Bakkt and ErisX. They provide cryptocurrency trust services as standard as they actually exchange bitcoins, and sell 1-day gift products.
Attorney Yoon said that there are also non-regulated bitcoin futures markets such as Bitmex, OKEx, Binance, and Huobi, but in October 2020, BitMEX was trading in US commodity futures. He explained that there is an investment risk, such as being prosecuted by the CFTC for violating the Bank secrecy act.
Attorney Yoon pointed out △hedge price volatility △participation of institutional investors as the core role of the Bitcoin futures market. Attorney Yoon said, “The price volatility of cryptocurrency limits the use of various services such as payment settlement, remittance, and mortgage loans,” he said. “The futures market can play a role in reducing price volatility and providing various services.” .
US and other product definitions
Bitcoin futures products are actively sold in the US, but why not in Korea? It is analyzed that this is due to the scope of commodity defined by the US Commodity Exchange Act.
In the US Commodity Transaction Act, commodities are not only tangible assets such as grain and crude oil, but also services and rights, which can be traded in the present or future through contracts, and commodities can be traded in futures. On the other hand, Korea defines only basic assets such as financial investment products and general tangible goods as futures under the Capital Markets Act.
Attorney Yoon said, “The Korean government maintains a consistent negative position on virtual assets (cryptocurrency), and it is not defined whether Bitcoin is an underlying asset under the Capital Markets Act. The futures market has hedging price volatility and participation in period investors. , As it is the foundation on which various services can emerge, discussion is necessary.”
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