CoinFLEX, a crypto exchange launched a few months ago, has decided to take advantage of the uncertainty surrounding the Facebook stablecoin to launch futures on Libra. The exchange is preparing derivative contracts to bet on the arrival of Libra by 2020.
It’s no secret that, ever since Facebook unveiled its project in June, banks and regulators have been doing everything in their power to hinder its success. Alexandre Lemarchard, Vice President of Global Sales for Ledger Vault, talked about this at the Blockchain Live event in London. According to Lemarchard, Libra is raising many concerns and all the regulatory bodies are trying to control it.
Facebook has leaked rumours that they would like Libra to be ready by mid-2020 but Zuckerberg has intervened by saying that there is no precise launch date. When asked about the possible launch in 2020, the CEO attempted to deflect:
“Obviously we want to move forward at some point soon and not have it take many years to roll out. Right now I’m really focused on making sure that we do this well.”
Libra in 2020? It’s not easy
The arrival by 2020 is by no means a foregone conclusion considering that the Libra Association continues to struggle. Germany, represented by the Minister of Finance, has strongly opposed this possibility.
PayPal, one of the 28 founding members, didn’t attend the meeting held in Washington last Thursday, suggesting a possible abandonment of the project, according to the Financial Times.
PayPal has probably received pressure from regulators. The WSJ reported that the Treasury Department had sent letters to US companies involved in the project, including VISA, MasterCard, PayPal and Stripe, asking them to provide a comprehensive overview of their anti-money laundering compliance programs and how Libra will adapt to them.
The idea of CoinFLEX and the futures on Libra
This situation led to the idea of CoinFLEX. The exchange intends to launch an Initial Futures Opening (IFO) for Libra futures on October 24th. The futures will allow traders to bet on the arrival of Libra by December 30th, 2020. In case of a successful bet, the trader will get the Libra tokens, which means that if the stablecoin is not ready by the end of next year, the investment will be lost.
Futures are contracts that allow investors to “bet” on the value of an underlying indicator. There are futures based on almost anything, but they are mainly used to “bet” on the value of commodities. They are very important for the crypto world because they encourage the entry of institutional investors and the increase in volumes.
The initial price of the futures on Libra will be 30 cents, said CoinFLEX CEO Mark Lamb. This price is not random: it is equivalent to the chances that Libra has of being operational by 30/12/2020, which is 30%. After 30 minutes from the launch of the IFO, investors who have participated can start to trade futures at the market price. Traders can also bet against the arrival of Libra. Both long and short positions will be capped at $1.1.
These futures are not the first ones offered by the platform. The Seychelles-based exchange has already launched an IFO on the Polkadot (DOT) project and also offers futures on bitcoin (BTC), bitcoin cash (BCH) and ether (ETH).