CoinFLEX Addresses Price Manipulation with Physical Delivery of Bitcoin Contracts

Asia Blockchain Review
August 31, 2019
CoinFLEX Addresses Price Manipulation with Physical Delivery of Bitcoin Contracts

CoinFLEX — formerly known as Coinfloor — announced that retail investors for Bitcoin futures will be paid in Bitcoin once their contracts expire instead of traditional cash settlement to reduce the risk of price manipulation in the market.

Offering Physically Settled Bitcoin Futures to Traders in Asia 

As Bitcoin currently has the largest share in the crypto market, CoinFLEX is now providing its traders with the opportunity to invest in Bitcoin futures contracts, claiming it is the first exchange to offer physical delivery.

According to Tron Weekly Journal, the Hong Kong-based exchange said that physical delivery of Bitcoin futures is much less likely to encounter price manipulation, in contrast to contracts settled in cash.

Regardless, CoinFLEX’s new service goes to head-to-head with Intercontinental Exchange’s  Bakkt exchange, also slated to launch physically delivered Bitcoin futures contracts from September 23rd.

Kenetic Capital Questions the Need for Physical Settlement

Mark Lamb, CEO of CoinFLEX, said the issue of price manipulation in cash-settled markets affects all traders. 

“Professional and retail traders alike are affected by price manipulation in the cash-settled futures market. In physically delivered contracts, anyone long at expiry receives the underlying bitcoin. There are no formulas involved,” Lamb said.

On the other hand, Benjamin Roth, global head of trading at Kenetic Capital, has a different take. While he admitted that physically delivered contracts are less likely to suffer manipulation, Roth also said he hasn’t seen “much evidence of price manipulation in the cash-settlement market.”

Nonetheless, Roth agreed that there is a demand for physically delivered Bitcoin futures contracts.


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