Are tether tokens really backed by dollars? (via Shutterstock)

Bitfinex to launch bitcoin options

The cryptocurrency exchange’s options will be settled in tether, the stablecoin issued by Bitfinex’s sister company; ICE and Bakkt also announced options, but settled in cash

Bitfinex has announced plans to offer bitcoin options that will put it in direct competition with two major traditional exchange operators, Intercontinental Exchange and CME Group’s Bakkt. Both of those also announced enhanced bitcoin options choices over the past two days.

Cryptocurrency exchange Bitfinex’s CTO, Paolo Ardoino, announced plans to offer options on perpetual swaps and futures on bitcoin (BTC) contracts by March on the November 12 episode of The Block’s podcast The Scoop. 

Tether Watch

Notably, the options will be settled in tether (USDT) stablecoins. That will have the side benefit of expanding the reach and use the USDT produced by Bitfinex’s sister company, Tether. Both are owned by iFinex, and the options will be run through another of its firms, iFinex Technologies Limited.

Ardoino said the company would be working with external market makers to ensure liquidity. In June, Bitfinex launched tether-based trading of derivatives with up to 100x leverage, The Block noted.

Bitfinex and Tether are currently being sued by New York Attorney General Letitia James for fraud and securities violations. She claims that Tether’s loan of more than $700 million to Bitfinex after the exchange was robbed of $880 million should have been disclosed. That loan temporarily invalidated Tether’s much-ballyhooed (but never audited) claim that USTD is backed one-to-one by U.S. dollars.

In that interview, Ardoino also briefly mentioned plans to launch Tether Gold, a stablecoin backed by gold rather than U.S. dollars. A similar product was launched by rival exchange operator Paxos in early September. 

Also on Tuesday, CME Group—owner of the Chicago Mercantile Exchange—announced plans to offer institutional investors options on Bitcoin (BTC) futures contracts beginning on January 13. Assuming, of course, they get regulatory approval from the Commodity Futures Trading Commission (CFTC).

The cash-settled options are based on one CME Bitcoin futures contract of five BTC. A minimum block of five contracts will be required.

On November 13, one of CME Group’s biggest competitors also jumped in. Bakkt COO Adam White told attendees of the Invest: NYC conference that it is working on a cash-settled bitcoin options product, CoinDesk reported

Currently Bakkt, a subsidiary of Intercontinental Exchange (ICE), only offers physically settled options. It hopes to gain approval for the cash-settled options before the end of this year.

On November 11, White announced that Bakkt had opened its bitcoin custody service to all institutional investors, not just futures contract clients. That came after the New York Department of Financial Services (NYDFS) granted approval. 

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.