Hong Kong-based crypto exchange Coin Futures and Lending Exchange (CoinFLEX) has announced that it will be providing futures contracts for cryptocurrencies to Asian investors as from February 2019.
CoinFLEX was launched in February 2018 as CoinfloorEX, a division of Coinfloor, the oldest British Bitcoin exchange. However, the venture has now announced that it will be breaking off from its former parent company.
CoinFLEX aims to enter the highly competitive market and has solid backing from the UK’s oldest Bitcoin exchange which will also retain a stake in the new venture.
The new platform is co-owned by its parent company Coinfloor and notable industry investors such as Bitcoin Cash Evangelist Roger Ver, B2C2, Dragonfly Capital, Trading Technologies, Mike Komaransky, and others.
Speaking in an interview with Bloomberg, CoinFLEX CEO Mark Lamb said:
“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.”
Lamb added that the current daily trading volume in the market is pegged at $3 million, but there is more potential for growth.
CoinFLEX is taking a gamble itself by using Tether to trade against, but providing there are no further auditing issues for USDT, and it retains its peg to the dollar things should go smoothly. It will also issue a contract using USDC, the stablecoin from Circle and Coinbase.
“Tether is the most liquid, highest volume stable coin that exists right now and seeing the resolution of recent issues and attestations by banks and outside firms make us confident in using it as a stable coin.”
With the backing of Ver, Lamb also hopes CoinFLEX will become the largest venue for trading of Bitcoin Cash derivatives. Ver was an early advocate of the Bitcoin offshoot and together with Bitmain Technologies Ltd. led a faction of software developers in a recent high-profile tussle over how to best update the coin’s code that ended up splitting the network.
Crypto trader Mike Komaransky, as well as market makers B2C2, Amber AI Group and Grapefruit Trading, are also among CoinFLEX’s backers. Alameda Research, Dragonfly Capital Partners and Global Advisors, the parent of a crypto exchange-traded notes issuer, are also in the consortium.
The huge interest in trading derivatives contracts on commodities back in the 80s drove the emergence of a massive industry which until this day has not subsided. The global financial derivatives market has grown exponentially until 2008 when the Great Financial Crisis left a dent into its size.
That said, the loosely regulated cryptocurrency market is likely to attract more investors as the value of major cryptocurrencies stabilizes. The latest bout of volatility in cryptocurrencies yielded a fragile market, but the rebound of Bitcoin above $3,500 and its recent flirt with the $4,000 level could prove attractive for crypto-enthusiasts.