Nasdaq, VanEck Partner to Launch 'Crypto 2.0' Futures Contracts

The second-largest stock exchange in the world is partnering with investment management firm VanEck to bring a host of new cryptocurrency financial products to market.

That partnership was officially unveiled during CoinDesk's Consensus: Invest conference, when Gabor Gurbacs – VanEck's director of digital asset strategy – announced the move to "bring a regulated crypto 2.0 futures-type contract" to the market.

According to Gurbacs, what they're planning to release early next year is to be the first of several such products.

“What I’d like to point out is we ran a few extra miles working with the [Commodity Futures Trading Commission] to bring about new standards for custody and surveillance," he commented during a panel.

In a follow-up interview, Gurbacs told CoinDesk that these futures products could be thought of as an "upgrade" to current regulatory standards that surround bitcoin futures products.

By leveraging Nasdaq's stock markets surveillance system, called SMARTS, as well as the trusted pricing benchmarks provided by MVIS, the aim is to “inspire confidence with regulators and institutions trying to get involved [in the crypto markets]," according to Gurbacs.

SMARTS is a software hosting hundreds of detection algorithms designed to automatically pick-up on suspicious market activity such as spoofing and wash trading. Calling it the "big policeman engine," Gurbacs explained the technology would ensure bitcoin futures trading “in a fair and orderly fashion."

State of play

As it stands, the Commodity Futures Trading Commission (CFTC) has approved two bitcoin futures products to date - one operated by the Chicago Board Options Exchange in partnership with Gemini Exchange and the other operated by the Chicago Mercantile Exchange in partnership with Crypto Facilities.

These futures contracts are cash-settled, meaning that at expiration no “physical” bitcoins need to be moved in order to settle accounts. In contrast, a concurrent bitcoin futures product expected to launch in January of next year operated by the Intercontinental Exchange-backed company Bakkt will be physically-settled, meaning investors holding these contracts at expiration would receive payment in bitcoin.

Gurbacs didn't disclose whether the anticipated bitcoin futures product between Nasdaq and VanEck’s price indexing arm MVIS would be similarly cash-backed. Representatives at Nasdaq also declined to comment further on the matter.

Still, Gurbacs hinted that "there's lots to look forward to in 2019,” emphasizing a hopeful launch date for the bitcoin futures product in Q1 of next year.

What’s more, the physical-backed bitcoin exchange-traded fund proposed by VanEck in partnership with blockchain technology company SolidX is also expected to reach a final decision by the Securities and Exchange Commission by February 27, 2019.

Seeing “an exciting Q1 coming up,” Gurbacs predicted:

“We believe that 2018 was the year of regulation and 2019 will be the year of implementation.”

Photo by Stan Higgins for CoinDesk