If the November and December crypto bull market and flurry of institutional attention have taught us anything, it’s that Bitcoin and its cohorts are red hot going into 2018. Mainstream exposure has ignited public interest in cryptocurrency, and financial institutions can’t wait to get their hands into the market. Meanwhile, governments are scurrying to accommodate crypto and its markets in their regulatory frameworks, as all signs point to 2018 as being blockchain’s year of adoption and regulation.
All Eyes on Crypto
Bitcoin continued its healthy uptrend today in the wake of the CBOE futures listing, as the market continues to show its optimism entering 2017’s home stretch. Investor confidence is so strong that CBOE’s Bitcoin Futures ($XBT) traded over 800 contracts within two hours of its launch; that’s a healthy US$12,000,000. Futures-buying traffic was so high, in fact, that CBOE’s website crashed as a result.
The massive interest in CBOE Bitcoin Futures is intriguing in its own right, but it’s part of a larger pattern. In recent months, mainstream investors, businesses, and governments have taken an increasing interest in cryptocurrencies and blockchain technology. We’re starting to see cryptoassets receive traditional investing treatment and corporate adoption of the blockchain, and this leaves governments with the task of formally accommodating a previously unregulated market.
Blockchain Meets Traditional Market, Big Business
Every day, news articles tell the same story with a different tone: institutional interest in Bitcoin is on the rise, and it’s quite literally bringing the market with it. Conventional financial organizations have begun to tap into Bitcoin’s investing potential, making it more accessible to the general public.
We’ve seen this most recently with CBOE Bitcoin Futures, but CBOE was just the first to the punch. The CME Group is slated to launch futures trading starting December 18, and NASDAQ has plans to provide futures for its NFX market sometime in 2018. Such formal market integration is not confined to the US either. In Japan, for instance, the Tokyo Financial Exchange plans to launch its own Bitcoin futures “as quickly as possible,” according to CEO Shozo Ohto.
For Japan, Bitcoin futures seem to fall in line with business and enterprise acceptance of blockchain in general. For example, GMO Internet Group, Japan’s largest internet provider, recently announced that it will begin providing employees with the option to be paid their salary in Bitcoin. This news comes at a time when 37 Korean and Japanese financial institutions, including SMBC and Resona Bank, will experiment with remittance payments using Ripple and its token, XRP.
Governments Respond with Regulation
As cryptocurrencies begin mingling with traditional markets, many governments have taken steps to regulate these previously unregulated financial assets. While some may view these regulations as a hindrance, some believe that they contribute to crypto’s overall growth.
And once again, Japan is contributing to this growth. Since September, the Japanese Financial Services Agency has registered and approved 15 cryptocurrency exchanges for public trading, while making it clear that only these 15 exchanges will be legally permitted to trade cryptoassets.
Meanwhile, in the United States, the launch of Bitcoin futures has prompted two companies to apply to launch Bitcoin exchange-traded funds: the REX Bitcoin Strategy and Short Bitcoin Strategy ETF and the VanEck Vector Bitcoin Strategy ETF. Both ETFs hope to launch sometime in the new year.
These are just a few examples of how governments are responding to crypto’s rise to public prominence. The UK has plans to up its own regulatory ante, the Philippines has rolled out a game plan for handling ICOs, and Russia may be turning to cryptocurrencies to circumvent sanctions on oil trading.
It’s becoming increasingly clear that 2018 will be a defining year for blockchain technology. As we enter the new year, cryptocurrencies will likely continue to make waves with a sea of public and institutional attention, and we’ll be eager to see how adoption takes shape and how governments react to crypto’s arrival in the mainstream.