Originally published on: October 08, 2024
Crypto.com’s North American derivatives exchange, Nadex, has recently listed derivatives contracts tied to popular memecoins like PEPE and FLOKI, as reported in filings with the United States Commodity Futures Trading Commission (CFTC) on Oct. 7.
In addition to these memecoins, Nadex has also introduced derivatives products linked to Dogelon Mars (ELON) and BONK, diversifying its offerings for cryptocurrency traders. The total market capitalization of the four memecoins associated with Nadex’s contracts is estimated to be nearly $7 billion, according to CoinMarketCap data.
This move adds to Nadex’s current lineup of cryptocurrency derivatives products, which includes contracts tied to prominent blockchain network tokens such as Bitcoin (BTC) and Ether (ETH). The introduction of these memecoin contracts showcases Nadex’s commitment to meeting the evolving demands of traders in the cryptocurrency market.
Using what they call “touch bracket” contracts, Nadex offers hedging instruments designed to pay out if a token’s spot price reaches a predetermined ceiling or floor before the contract’s expiry. These contracts are particularly popular in high-volatility markets like cryptocurrency, providing a unique structure that minimizes the risk of contract manipulation, as highlighted in the filings.
The growing popularity of crypto derivatives is evident on regulated US exchanges, with established platforms like the Chicago Mercantile Exchange (CME) also offering these products. Most recently, the US Securities and Exchange Commission (SEC) granted Nasdaq the authorization to list options linked to the iShares Bitcoin Trust (IBIT) by BlackRock.
While the options await final approvals from various agencies, including the CFTC, Nadex continues to witness significant trading volumes for its contracts tied to BTC, ETH, and Litecoin (LTC). The combined trading volumes for these contracts surpassed 28 million in 2023, underscoring the demand for diverse and regulated cryptocurrency derivative products.
In a bid to cater to the growing interest in crypto derivatives, exchanges like Nadex self-certify new products, ensuring compliance with existing regulations. This proactive approach allows for the swift listing of contracts without the need for explicit regulatory approvals.
In a similar vein, on Oct. 7, another derivatives exchange, Kalshi, successfully listed event contracts for betting on US election outcomes following a legal battle with the CFTC. This move was followed by the addition of a political event contract on Oct. 8, enabling traders to bet on whether New York City’s Mayor Eric Adams will resign, adding an exciting dimension to the platform’s offerings.
As the cryptocurrency market continues to evolve, traders can expect increased diversity in derivative products, offering new ways to navigate this dynamic space. Subscribe to Markets Outlook newsletter to stay updated on critical insights and spot new investment opportunities in the ever-changing world of trading.
