Institutional Investors Are Swapping Bitcoin Futures for Physical BTC

During the last week of July 2018, Wall Street traders completed their first-ever Bitcoin futures swap for physical BTC.Exchange for Physical Crypto Transactions.

In a major stride for Bitcoin mainstream adoption, two institutional investors completed the first-ever exchange for physical transaction with CME Bitcoin futures earlier this week.

Registered futures commission merchant E D & F Man Capital Markets and itBit cryptocurrency exchange facilitated the CME EFP Bitcoin transaction, allowing two traders to swap a CME Bitcoin futures position for an equal amount in the underlying digital asset itself.

EFPs allow institutional investors to hedge commodity and futures positions and diversify portfolio exposure to different assets, often providing firms with capital, tax, or liquidity benefits.

EFP transactions have existed as a common financial instrument in the commodities and futures markets, but they have never been used to process a U.S. futures swap where the underlying asset is Bitcoin.

Brooks Dudley of E D & F Man Capital Markets Inc commented on the trade in an interview with CCN:. "Every day we facilitate EFPs for our clients in physical assets such as soybeans, wheat and treasuries. EFPs on CME Bitcoin futures mark an important step forward in the maturity of the regulated derivatives market for digital currencies."

Until now, the U.S. Commodity Futures Trading Commision has only approved cash-settlements of Bitcoin futures - meaning that traders can only receive cash when their futures contracts expire.

Earlier this month, CME revealed that Bitcoin futures average daily trading volume in Q2 2018 grew 93% from the previous quarter - indicating a significant rise in popularity for Bitcoin futures trading.

On June 26, Cboe futures exchange submitted a Bitcoin ETF application to the U.S. Securities and Exchange Commission.

If approved, the Bitcoin ETF proposal could catalyze an influx of institutional capital into the cryptocurrency sector and mark the second regulated digital asset product to list on public markets.