CoinFLEX to Compete with Bakkt on Physical Delivery Bitcoin (BTC) Futures

Coinfloor spin-off CoinFLEX will offer physical delivery Bitcoin futures, competing with larger markets that also aim to provide this type of financial instrument.

CoinFLEX, a spin-off of London-based exchange Coinfloor, plans to offer physical-delivery Bitcoin (BTC) futures, as per a Bloomberg report. The new market, which is supported by a consortium of investors, will provide an alternative to the Bakkt physical delivery futures.

Bakkt, which is owned by Intercontinental Exchange (ICE), recently said it was again delaying the launch and announced new developments.

While Bakkt is in discussions with the Commodities Futures Trading Commission, CoinFLEX (short for Coin Futures and Lending Exchange) may be able to launch sooner. It will be incorporated in the Seychelles and is not expected to have the same regulatory scrutiny. The owners of the new exchange include Coinfloor, Roger Ver, and Trading Technologies International. The platform has also received support from B2C2, Amber AI Group, Grapefruit Trading, Alameda Research, Dragonfly Capital Partners and Global Advisors, as well as crypto trader Mike Komaransky.

Based in Hong Kong, the new company will offer futures for three of the most liquid digital assets - Bitcoin, Bitcoin Cash, and Ethereum. Trading will also include leverage of up to 20 times. The exchange is expected to launch in February, withMark Lambas director.

The key difference between CoinFLEX and other exchanges would be the role of Tether (USDT), which would serve as a means of payment upon the settlement of futures. While one side of the contract would receive BTC coins in physical delivery, the other counterparty would be reimbursed in USDT, not in dollars.

“Tether is the most liquid, highest volume stable coin that exists right now and seeing the resolution of recent issues and attestations by banks and outside firms make us confident in using it as a stable coin,” Lamb said.

Unfortunately, the involvement of USDT has made the crypto community view the upcoming exchange with some skepticism. The Tether company is still raising doubts about its solvency, and the heavy reliance of the crypto trading ecosystem on it is worrying to some traders. While USDT itself is liquid in trading against digital assets, it is relatively difficult to exchange back to fiat currency.

Unlike CME and CBOE futures, which are cash-settled and do not affect the BTC price directly, the new CoinFLEX market will be closer to the crypto ecosystem and BTC/USDT pairs, potentially influencing the movements of BTC.