CoinFLEX, a new cryptocurrency derivative exchange is planning to launch unique derivative products in February. The exchange is going to offer stablecoin-to-stablecoin futures and physically delivered Bitcoin futures.
A Bitcoin futures market, CoinfloorEx has spun off from its parent company Coinfloor Group and renamed as CoinFLEX (Coin Futures and Leading Exchange). CoinfloorEx was a unit of the United Kingdom Bitcoin Exchange, Coinfloor. CoinFLEX will now focus on Asian retail customers by offering numerous derivative products.
The new venture is owned by a consortium including early advocate of cryptocurrencies Roger Ver and Trading Technologies International Inc. Trading Technologies develops trading software for money managers and brokers. Coinfloor will also retain an equity stake in CoinFLEX. One of the co-founders of Coinfloor, Mark Lamb is the Chief Executive Officer (CEO) of the CoinFLEX.
The new futures contracts will allow the users to exchange Tether (USDT) for another digital asset designed to hold its value with the United States dollar. According to Lamb, tether is the most liquid and highest volume stablecoin which encouraged us to use it as a stablecoin.
The exchange will also offer futures contracts for Bitcoin (BTC), Bitcoin Cash (BCH), and Ethereum (ETH) which can be leveraged 20 times. The key distinguishing factor for CoinFLEX is that all the futures contracts which will trade on the exchange will be physically delivered. In an interview, Lamb said, it means when the contract will expire, the owners will receive the underlying cryptocurrency instead of cash payment. According to Lamb,
“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.”
Physical delivery will be an added advantage for the CoinFLEX as some big players believe that the process of settling a contract in cash could be manipulative. Lamb said that, currently, the daily volume of trading in the underlying cryptocurrency market is almost equal to that in derivatives, which is around $3 billion. In other markets, the volume of futures contracts can be 20 times larger so there are plenty of rooms for the growth in the crypto derivative segment.
It is expected that CoinFLEX will take the business of BitMEX, which is one of the largest crypto trading platforms and has a sizable presence in Hong Kong. BitMEX offers leverage up to 100 times for some of its contracts. According to Lamb,
“In order to be a large, global exchange focused on traders, the best way to serve the market is to be offshore. Since crypto is a global audience and being regulated by one country would restrict who we can deal with elsewhere, we have chosen to be offshore in order to maximize our accessibility and the trust traders place in us.”
CoinFLEX will also have to compete with the Intercontinental Exchange Inc., the owner of New York Stock Exchange. They also have plans to introduce physically delivered futures contract.