CoinFlex, the new cryptocurrency futures exchange, which proclaims to be the world’s first exchange that provides physical delivery for Bitcoin futures contracts, aims for increasing business from Asian retail investors who want to stay away from surrendering to price manipulation which is vital for cash repayment contracts. Additionally, physically delivered Bitcoin futures contracts are said to encourage a basis exchange, a kind of arbitrage that benefits on disparities among futures and its fundamental spot resource, as per Lamb.
CoinFLEX CEO @MarkDavidLamb is on SCMP today!??
He explains how physically delivered futures benefit traders??
— CoinFLEX (@CoinFLEXdotcom) August 26, 2019
CEO of the organization, Mark Lamb said that contracts that physically deliver Bitcoin and different tokens at settlement will profit traders, who can be sure the spot and futures costs have not been leveraged and that they accurately track the spot Bitcoin cost. This is because money repayment contracts, whose price is frequently calculated utilizing a formula dependent on the spot Bitcoin costs of different exchanges, can be effectively controlled.
Professional and retail traders alike are affected by price manipulation in the cash-settled futures market. In physically delivered contracts, anyone long at expiry receives the underlying Bitcoin. There are no formulas involved.
Furthermore, Lamb added that he had seen an expansion in efforts to control costs in the recent months, by merchants who moved the original spot prices that go into the formula to support them, as they profited from the skimpier trading volume of the cryptocurrency spot market contrasted with futures. As of now, the trading volume of the Bitcoin futures is 1.5 times considering spot.
CoinFlex, which has employee strength of 23, launched its platform for trading last February. Furthermore, Lamb was not reserved about its objective to get ahead of exchanging volume of US 2.86 billion dollars, as per cryptocurrency evaluation and ranking site Coingecko. Recently, BitMEX banned Hong Kong clients in the midst of expanding regulatory scrutiny of cryptocurrency exchange operators worldwide.
Financial markets director at OKEx, Lennix Lai, Malta-based crypto exchange that offers both spot and derivatives trading, offers cash-settled bitcoin futures, stated that a noteworthy disadvantage of the physical settlement was that in contrast with money settlement it is very costly. Physical delivery acquires extra costs, like, the Bitcoin transaction charge.
CoinFlex closed a US10 million dollars financing round a week ago from a few blockchain speculators, which includes NGC Ventures, Polychain Capital, a multi-procedure cryptocurrency fund, Bitcoin money advocate Roger Ver and Divergence Digital Currency.
During the time of CoinFlex launch, Lamb noticed the company’s physically delivered contracts as one of its fundamental differentiators from the competition. Currently, various physically delivered futures begin to come online.