Regulators Ready to Approve Ethereum Futures, CFTC Insider Says

The CFTC is willing to let an ether futures contract go to market after soliciting market feedback last year.

The U.S. Commodity Futures Trading Commission is willing to approve an ether futures contract - provided it ticks all the right boxes, a senior official has told CoinDesk.

The CFTC, which oversees derivatives markets in the U.S., has already allowed bitcoin futures markets to launch, with both CME Group and Cboe Global Exchange offering cash-settled contracts at the end of 2017.

In the long run, Todaro added, a CFTC-supervised futures market "Could usher in confidence among regulators such as the SEC which could pave the way for an ETF," an exchange-traded fund bringing additional liquidity to ether.

To be sure, some have argued that futures may also have hurt bitcoin's price, though Todaro said that it is more likely that bitcoin's price had already reached its peak and the approval of futures just happened to coincide with that time.

The CFTC first indicated it was looking at ethereum in December when the regulator published a "Request for Input" asking a number of questions about the world's second-largest cryptocurrency by market cap, the market around it and the underlying technology.

George Pullen, a senior economist with the CFTC Division of Market Oversight, told CoinDesk at the end of March that the RFI sought industry and market input on the risks, mechanics and use cases for ether.

In addition to giving investors access to a new derivatives product, approving an ether futures contract may cement the CFTC's regulatory authority over the underlying spot market.

Notably, ErisX, a digital assets and futures trading platform, believes that regulating a futures contract on ethereum would grant the CFTC some additional oversight on the ethereum spot market.

Thomas Chippas, the exchange's CEO, wrote in his response to the RFI that a futures contract that "Includes a settlement price set by a physically settled cash market" in the U.S. may improve the CFTC's "Ability to properly oversee or monitor the cash market for fraud and manipulation." ErisX declined to comment for this article.