Coin Futures and Lending Exchange (CoinFLEX), a former unit of UK Bitcoin exchange Coinfloor, intends to provide physically-settled Bitcoin futures to the Asian market in February 2019. The platform is owned by a consortium which includes Roger Ver (Bitcoin.com CEO), B2C2, Trading Technologies International Inc and Alameda Research among others.
As reported by Bloomberg, CoinFLEX intends to offer futures contracts, an agreement to buy or sell currency at a predetermined price at a specified time in the future, for Bitcoin, Bitcoin Cash, and Ethereum. This offer is similar to Bakkt (owned by Intercontinental Exchange), they both provide physically-settled futures contracts.
Mark Lamb, CoinFLEX CEO, said that by offering futures contracts means improving trust. In a Bloomberg interview, Lamb said physical delivery is one of main reasons that prevents crypto derivatives from developing to a larger market. Cash-settled trading causes trust issue.
Mark Lamb sees the potential of expanding the cryptocurrency futures market and it can develop its size market by 20 times.
CoinFLEX offering contracts will trade against Tether (USDT), the most popular stablecoin. They also plan to set out another contract that trades against Circle’s USD Coin; a type of stablecoin.
Futures contracts means that in order to receive Bitcoin, Ethereum, or Bitcoin Cash, trader hold long position at the end of the contract. By contrast, traders who hold short position will receive USDT depending on the performance of the contract. Trades receive the underlying asset instead of a payment in cash.
CoinFLEX is an incorporated offshore, providing the venture to offer product in a global market.
Noticing the competition with Bakkt, CME and CBOE, Lamb stated that U.S-based crypto Bitcoin futures trading will not cause a big effect on the market, due to its small portion.
The main reason for this difference is because U.S. market is highly regulated. The U.S.-based trading futures cannot go up against with their counterparts based offshore or in Asia, a large and developing market comparing to United States.
By focusing on the Asian market, CoinFLEX will be competing with BitMEX, one of the largest cryptocurrency trading platform. CoinFLEX tends compete with its competitor by offering a leverage of 20 times on specific contracts.