5 ms·

Again the biggest issue is how to verify the integrity of the underlying instrument, in this case bitcoin. What the SEC was after when they denied the winklevo

Again the biggest issue is how to verify the integrity of the underlying instrument, in this case bitcoin. What the SEC was after when they denied the winklevoss ETF was a way to confirming that they could audit all bitcoin transactions on the applicable exchanges, and following from that, the identities of all the exchange participants. Here is the reference index that the CME is using http://www.cmegroup.com/trading/cf-bitcoin-reference-rate.html http://www.cmegroup.com/trading/cf-bitcoin-reference-rate.ht... and here is the methodology that they are using to calculate the bitcoin price. As far as I can see, they are accepting trade confirms from the following venues.... Bitfinex, Bitstamp, GDAX, itBit, Kraken and OKCoin.com http://www.cmegroup.com/trading/files/bitcoin-reference-rate-methodology.pdf http://www.cmegroup.com/trading/files/bitcoin-reference-rate... Interesting that these are cash settled vs being settled in bitcoin. I guess that speaks as to who they expect to use these instruments.

andrewla 9y ago
> What the SEC was after when they denied the winklevoss ETF was a way to confirming that they could audit all bitcoin transactions on the applicable exchanges, and following from that, the identities of all the exchange participants. I don't think that's accurate, unless you're using a strange sense of the word "audit". The SEC's criticism seemed mainly to focus on the fact that the exchanges lacked controls to prevent price manipulation, and lacked oversight by regulators (not just the SEC) to ensure those controls were in place and effective. The constituent exchanges are listed here [1], basically the list you posted without Bitfinex or OKCoin.com. > Interesting that these are cash settled vs being settled in bitcoin. I guess that speaks as to who they expect to use these instruments. This seems an odd decision to me as well, especially since Bitcoin is almost a textbook commodity. I guess they are afraid that there could be a short squeeze if the existing exchange can't handle a greatly increased volume, but trusting that the exchanges can provide sufficient liquidity is a requirement to use their pricing data as well, otherwise you can get manipulation on the other end. [1] http://www.cmegroup.com/education/brr-brti-constituent-exchanges-criteria.html http://www.cmegroup.com/education/brr-brti-constituent-excha...
- ttul 9y ago
  Drug dealers will use the futures. Drug dealers.
  - deleted 9y ago
    [deleted]
vizzah 9y ago
In a few weeks time most Bitcoin holders will be confused what is called "Bitcoin" - whether it's an original BTC chain or B2X (Segwit2x) fork. Nobody knows what will become a Bitcoin.. that's speaking about "integrity of the underlying instrument" ;-)
- virtuexru 9y ago
  No one is calling B2X Bitcoin except for a very small vocal minority. Almost every other exchange/company has released a statement saying BTC will remind as the core chain.
  - uncletammy 9y ago
    > No one is calling B2X Bitcoin except for a very small vocal minority. Either you're intentionally lying or you haven't spent enough time outside of the highly censored /r/bitcoin subreddit. Here's my evidence and it's straight from Bitcoin core's site. https://bitcoin.org/en/alert/2017-10-09-segwit2x-safety https://bitcoin.org/en/alert/2017-10-09-segwit2x-safety Check the list on the bottom. If that doesn't prove to you that the overwhelming majority of businesses and users are upgrading the network via segwit2x, you're a lost cause.
    - virtuexru 9y ago
      Signaling does not mean they will necessarily be upgrading. Let's take a look at the dropout rate shall we? http://segwit.party/nya/ http://segwit.party/nya/ And before resorting to underhanded insults (you're a lost cause) I'd do some research ;). Cheers.
      - uncletammy 9y ago
        > And before resorting to underhanded insults (you're a lost cause) Sorry about that. It's really difficult to tell the difference between a professional troll and an honest person with a genuine difference of opinion. It's been a tough few years for every Bitcoin believer.
    - 9y ago
mercyandgrace 9y ago
I believe all futures contracts are cash settled, including precious metals and stocks.
- chollida1 9y ago
  They are not. https://www.danielstrading.com/futures-trading-education/2014/01/03/physical-delivery-vs-cash-settlement https://www.danielstrading.com/futures-trading-education/201... Typically they almsot always were delivered rather than cash settled. Cash settlement is more common for futures on indexes. See here: http://www.cmegroup.com/market-data/reports/cash-settled-futures.html http://www.cmegroup.com/market-data/reports/cash-settled-fut...
  - tim333 9y ago
    From your own link (the first one): >It is estimated that only 2% of all futures contracts are actually delivered.
    - Idontagree 9y ago
      Also from the first link: Popular Physical Delivery futures contracts include (but are not limited to) CME Currencies (Euro, JPY, & GPB), CBOT Treasuries (2 yr, 5yr, 10 yr, & 30 yr), NYMEX Energies (Crude Oil, Natural Gas, RBOB Gasoline, & Heating Oil), CME Live Cattle, CBOT Grains (Corn, Wheat, Soybeans, Soybean Meal, Soybean Oil, Rice, and Oats), COMEX Metals (Gold, Silver, & Copper), and ICE Softs (Sugar, Cotton, Cocoa, Coffee and OJ). There are plenty of physical delivery futures still in existence.
    - retube 9y ago
      that is because futures are rarely held to expiry - They get rolled into the next contract. so even tho physically settled, physical settlement is rare.
dmichulke 9y ago
> Interesting that these are cash settled vs being settled in bitcoin. That is interesting to say the least. There are people claiming precious metal prices are being kept artificially low using a similar way. Formally the futures have to be settled in metal but for some reason deliveries from vaults never match (i.e., they are considerably lower) the those implied by the futures standing for delivery. Now for that to work with BTC the futures market has to get really big (in PM they say it's like 100 future oz vs 1 real oz) and they need an unlimited bankroll. At that point one can short the hell out of the futures and cash-settle if the sell avalanche doesn't affect the price as much as required. Not saying those "conspiracy theories about PM manipulation" are true (I have no way to know) but there is evidence that looks "quite extraordinary" to my eye.
- runeks 9y ago
  > [...] but there is evidence that looks "quite extraordinary" to my eye. What evidence? All the proponents I've heard advocating this theory have had zero evidence to back it up? Please provide yours.
  - dmichulke 9y ago
    Well, all I can post is conspiracy sites but here it is: - Look at the average daily gold price and when it's lowest http://goldsilverworlds.com/price/gold-and-silver-price-manipulation-explained-by-dimitri-speck/ http://goldsilverworlds.com/price/gold-and-silver-price-mani... - Look at paper ounces versus real gold in Comex storage: http://www.zerohedge.com/news/2015-08-03/comex-edge-deliverable-gold-drops-record-low-124-ounces-paper-every-ounce-physical http://www.zerohedge.com/news/2015-08-03/comex-edge-delivera... - Dumping 1.5 bn$ of Gold longs (these occur regularly, often at illiquid times) http://www.zerohedge.com/news/2016-08-24/someone-just-puked-15-billion-notional-gold http://www.zerohedge.com/news/2016-08-24/someone-just-puked-... Is any of this proof? No. Is it strange? I'd say so.
misja111 9y ago
> Interesting that these are cash settled vs being settled in bitcoin. Futures tend to be cash settled when the underlying instrument is not liquid enough. If the futures would be settled to Bitcoins, it would limit the trading too much; for every initial buyer there needs to be a short seller, and the risk of a short squeeze would keep sellers from entering the market.
- tomatocracy 9y ago
  Most futures tend to be cash settled in general in fact e.g. Eurodollar futures (the most liquid contract in the world) which have an underlying tied to 3 month LIBOR (i.e. effectively a bank deposit rate - very liquid indeed) are cash settled. And even for contracts which specify physical delivery (eg most commodities), most open interest is either closed out completely (or rolled to the next contract) prior to expiry day which means no physical settlement takes place. There are a few reasons for this but broadly it comes down to the fact that cash settled contracts are more attractive to a broader set of investors (which means more volume and thus more income for the exchange which sets the contract terms). For example, cash settlement is more useful to investors who wish to hedge something which is close to or correlated with, but not the same as, the underlying. Hence the popularity of Eurodollar futures. This is even the case with many commodities (how many people actually want to take or make delivery at the specified delivery point?) Playing against this is the fact that if the underlying market is less transparent (as is the case for many commodities) then physical delivery might be needed to ensure that meaningful arbitrage can take place to ensure confidence in the market (if arbitrageurs would otherwise stay away from the market then this would reduce liquidity of the futures contract - to the disbenefit of the exchange).

andrewla 9y ago

> What the SEC was after when they denied the winklevoss ETF was a way to confirming that they could audit all bitcoin transactions on the applicable exchanges, and following from that, the identities of all the exchange participants. I don't think that's accurate, unless you're using a strange sense of the word "audit". The SEC's criticism seemed mainly to focus on the fact that the exchanges lacked controls to prevent price manipulation, and lacked oversight by regulators (not just the SEC) to ensure those controls were in place and effective. The constituent exchanges are listed here [1], basically the list you posted without Bitfinex or OKCoin.com. > Interesting that these are cash settled vs being settled in bitcoin. I guess that speaks as to who they expect to use these instruments. This seems an odd decision to me as well, especially since Bitcoin is almost a textbook commodity. I guess they are afraid that there could be a short squeeze if the existing exchange can't handle a greatly increased volume, but trusting that the exchanges can provide sufficient liquidity is a requirement to use their pricing data as well, otherwise you can get manipulation on the other end. [1] http://www.cmegroup.com/education/brr-brti-constituent-exchanges-criteria.html http://www.cmegroup.com/education/brr-brti-constituent-excha...

ttul 9y ago
Drug dealers will use the futures. Drug dealers.
- deleted 9y ago
  [deleted]

vizzah 9y ago

In a few weeks time most Bitcoin holders will be confused what is called "Bitcoin" - whether it's an original BTC chain or B2X (Segwit2x) fork. Nobody knows what will become a Bitcoin.. that's speaking about "integrity of the underlying instrument" ;-)

virtuexru 9y ago
No one is calling B2X Bitcoin except for a very small vocal minority. Almost every other exchange/company has released a statement saying BTC will remind as the core chain.
- uncletammy 9y ago
  > No one is calling B2X Bitcoin except for a very small vocal minority. Either you're intentionally lying or you haven't spent enough time outside of the highly censored /r/bitcoin subreddit. Here's my evidence and it's straight from Bitcoin core's site. https://bitcoin.org/en/alert/2017-10-09-segwit2x-safety https://bitcoin.org/en/alert/2017-10-09-segwit2x-safety Check the list on the bottom. If that doesn't prove to you that the overwhelming majority of businesses and users are upgrading the network via segwit2x, you're a lost cause.
  - virtuexru 9y ago
    Signaling does not mean they will necessarily be upgrading. Let's take a look at the dropout rate shall we? http://segwit.party/nya/ http://segwit.party/nya/ And before resorting to underhanded insults (you're a lost cause) I'd do some research ;). Cheers.
    - uncletammy 9y ago
      > And before resorting to underhanded insults (you're a lost cause) Sorry about that. It's really difficult to tell the difference between a professional troll and an honest person with a genuine difference of opinion. It's been a tough few years for every Bitcoin believer.
  - 9y ago

mercyandgrace 9y ago

I believe all futures contracts are cash settled, including precious metals and stocks.

chollida1 9y ago
They are not. https://www.danielstrading.com/futures-trading-education/2014/01/03/physical-delivery-vs-cash-settlement https://www.danielstrading.com/futures-trading-education/201... Typically they almsot always were delivered rather than cash settled. Cash settlement is more common for futures on indexes. See here: http://www.cmegroup.com/market-data/reports/cash-settled-futures.html http://www.cmegroup.com/market-data/reports/cash-settled-fut...
- tim333 9y ago
  From your own link (the first one): >It is estimated that only 2% of all futures contracts are actually delivered.
  - Idontagree 9y ago
    Also from the first link: Popular Physical Delivery futures contracts include (but are not limited to) CME Currencies (Euro, JPY, & GPB), CBOT Treasuries (2 yr, 5yr, 10 yr, & 30 yr), NYMEX Energies (Crude Oil, Natural Gas, RBOB Gasoline, & Heating Oil), CME Live Cattle, CBOT Grains (Corn, Wheat, Soybeans, Soybean Meal, Soybean Oil, Rice, and Oats), COMEX Metals (Gold, Silver, & Copper), and ICE Softs (Sugar, Cotton, Cocoa, Coffee and OJ). There are plenty of physical delivery futures still in existence.
  - retube 9y ago
    that is because futures are rarely held to expiry - They get rolled into the next contract. so even tho physically settled, physical settlement is rare.

dmichulke 9y ago

> Interesting that these are cash settled vs being settled in bitcoin. That is interesting to say the least. There are people claiming precious metal prices are being kept artificially low using a similar way. Formally the futures have to be settled in metal but for some reason deliveries from vaults never match (i.e., they are considerably lower) the those implied by the futures standing for delivery. Now for that to work with BTC the futures market has to get really big (in PM they say it's like 100 future oz vs 1 real oz) and they need an unlimited bankroll. At that point one can short the hell out of the futures and cash-settle if the sell avalanche doesn't affect the price as much as required. Not saying those "conspiracy theories about PM manipulation" are true (I have no way to know) but there is evidence that looks "quite extraordinary" to my eye.

runeks 9y ago
> [...] but there is evidence that looks "quite extraordinary" to my eye. What evidence? All the proponents I've heard advocating this theory have had zero evidence to back it up? Please provide yours.
- dmichulke 9y ago
  Well, all I can post is conspiracy sites but here it is: - Look at the average daily gold price and when it's lowest http://goldsilverworlds.com/price/gold-and-silver-price-manipulation-explained-by-dimitri-speck/ http://goldsilverworlds.com/price/gold-and-silver-price-mani... - Look at paper ounces versus real gold in Comex storage: http://www.zerohedge.com/news/2015-08-03/comex-edge-deliverable-gold-drops-record-low-124-ounces-paper-every-ounce-physical http://www.zerohedge.com/news/2015-08-03/comex-edge-delivera... - Dumping 1.5 bn$ of Gold longs (these occur regularly, often at illiquid times) http://www.zerohedge.com/news/2016-08-24/someone-just-puked-15-billion-notional-gold http://www.zerohedge.com/news/2016-08-24/someone-just-puked-... Is any of this proof? No. Is it strange? I'd say so.

misja111 9y ago

> Interesting that these are cash settled vs being settled in bitcoin. Futures tend to be cash settled when the underlying instrument is not liquid enough. If the futures would be settled to Bitcoins, it would limit the trading too much; for every initial buyer there needs to be a short seller, and the risk of a short squeeze would keep sellers from entering the market.

tomatocracy 9y ago
Most futures tend to be cash settled in general in fact e.g. Eurodollar futures (the most liquid contract in the world) which have an underlying tied to 3 month LIBOR (i.e. effectively a bank deposit rate - very liquid indeed) are cash settled. And even for contracts which specify physical delivery (eg most commodities), most open interest is either closed out completely (or rolled to the next contract) prior to expiry day which means no physical settlement takes place. There are a few reasons for this but broadly it comes down to the fact that cash settled contracts are more attractive to a broader set of investors (which means more volume and thus more income for the exchange which sets the contract terms). For example, cash settlement is more useful to investors who wish to hedge something which is close to or correlated with, but not the same as, the underlying. Hence the popularity of Eurodollar futures. This is even the case with many commodities (how many people actually want to take or make delivery at the specified delivery point?) Playing against this is the fact that if the underlying market is less transparent (as is the case for many commodities) then physical delivery might be needed to ensure that meaningful arbitrage can take place to ensure confidence in the market (if arbitrageurs would otherwise stay away from the market then this would reduce liquidity of the futures contract - to the disbenefit of the exchange).