B3 will launch Bitcoin futures contract after CVM approval

B3, Brazil’s stock exchange, received approval from the Securities and Exchange Commission (CVM) to launch a Bitcoin futures contract (BIT).

According to a statement sent to CriptoFácil, with the approval given by the regulator, the Brazilian stock exchange expects to make the product available to the market next month, more precisely on April 17th.

Confirmation of the launch date is subject to approval, by the CVM, of a B3 operational manual with rules related to the contract.

The futures market is a tool for investors to protect themselves from fluctuations in the price of an asset, in this case, Bitcoin. As highlighted by B3, futures contracts are traded in an exchange environment at the price that investors believe these assets will be worth in the future, with B3 as the central counterparty.

Investors can use futures both as hedging instruments, to protect themselves against price changes, and as investment strategies, seeking profits through short-term turnover and speculation.

B3 receives approval from CVM and will launch Bitcoin futures

B3 already offers investors 14 ETFs and ETF BDRs related to the cryptocurrency market. In this way, Bitcoin Future is another alternative product that allows investors, via a derivative instrument, to protect against Bitcoin price fluctuations.

“B3 is expanding its operations in the cryptoactive market, offering investors different ways to diversify their strategies. This launch meets the demand for a derivative product that allows protection from Bitcoin price fluctuations or directional exposure to the asset, maintaining the security of operating in the Brazilian stock exchange environment”, highlighted Felipe Gonçalves, superintendent of Interest and Currency Products from B3.

The Bitcoin futures contract will use the Nasdaq Bitcoin Reference Price Index (NQBTC) as a reference. The value of a contract will be the equivalent of 0.1 Bitcoin, that is, 10% of the value of the cryptocurrency in reais. Furthermore, the contracts will expire monthly.

According to B3, in this type of contract, settlement will be exclusively financial. In other words, there is no buying and selling of cryptocurrencies. The financial results of negotiations occur based on the price variation of Bitcoin.

Initially, the Bitcoin futures contract will have market makers, agents that negotiate the product and help bring liquidity and reliability to price formation.

How to trade Bitcoin futures on B3?

In the futures market, the investor commits to buying or selling a specific type of asset on a future date at a pre-determined price. This all depends on your risk profile and strategy.

To trade Bitcoin futures, retail investors will need to deposit a minimum margin of R$100 per contract with the broker.

Investors who maintain positions in the contracts, that is, who do not clear their positions by the end of the trading session, must deposit the equivalent of 50% of the contract value. The guarantee margin deposit is a mechanism used to ensure that both ends of the operation comply with the financial obligation.

Another feature of the futures market is the payment of daily adjustments, according to the fluctuation in the contract price during the trading session. This means that the contracts will undergo adjustments in their value every day until the day they expire.

Contract expiration always occurs on the last Friday of the month. This allows the investor to set up strategies with different deadlines on the same asset.

With the increase in demand for regulated cryptocurrency instruments in Brazil, B3 began offering, in April 2021, products linked to digital assets. Today, there are already 13 cryptoactive ETFs with a total net worth of around R$2.5 billion and more than 170 thousand investors at the end of December 2023.

And, on March 1st, the iShares Bitcoin Trust ETF BDR (IBIT39) began trading on the Brazilian stock exchange, which seeks to monitor the performance of the Bitcoin price.

The launch of Bitcoin futures by B3 comes at a time of growth for the largest cryptocurrency on the market. According to data from CoinGecko, BTC is worth around US$70,200 today.