The introduction of exchange-traded bitcoin futures in the United States marked a pivotal moment in the evolution of digital assets within traditional financial markets. Approved by U.S. regulators and launched in late 2017, these futures contracts offered institutional and retail investors a regulated, transparent, and risk-managed way to gain exposure to bitcoin’s price movements—without holding the underlying cryptocurrency.
This article provides a comprehensive overview of the early U.S. bitcoin futures offerings from two major financial exchanges: the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME). While the original launch dates fall outside 2025, their structural design, regulatory context, and market implications remain relevant for understanding how traditional finance integrates emerging digital assets.
Background: Bitcoin’s Emergence and Regulatory Recognition
Bitcoin has long been a subject of debate regarding its classification—currency, commodity, or speculative asset. However, a key milestone came in 2015 when the U.S. Commodity Futures Trading Commission (CFTC) officially designated bitcoin as a commodity under the Commodity Exchange Act. This classification opened the door for regulated futures trading.
Despite repeated rejections of bitcoin ETF proposals, the approval of bitcoin futures by CBOE and CME represented a significant breakthrough. These products allowed investors to hedge risk, speculate on price direction, and participate in bitcoin’s volatility through familiar, exchange-based instruments.
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CBOE Bitcoin Futures: Design and Key Features
Launched on December 10, 2017, the CBOE Bitcoin (USD) Futures (ticker: XBT) were among the first regulated bitcoin derivatives in the U.S. The contract was designed with simplicity and compliance in mind.
Core Specifications
- Contract Size: 1 bitcoin per contract
Trading Hours:
- Regular session: 8:30 AM – 3:15 PM CT (Monday to Friday)
- Extended session: 5:00 PM CT (previous day) to 8:30 AM CT (next day)
- Settlement: Cash-settled
- Final Settlement Price: Based on the Gemini Exchange’s auction price at 4:00 PM ET on the second business day before expiry
- Price Tick: $10 minimum move; quotes can be quoted in $0.01 increments for precision
Position Limits:
- Aggregate limit: 5,000 net long or short contracts across all expiries
- Near-term limit: 1,000 contracts during the final five trading days before expiry
Unique Aspects
The most notable feature of the CBOE contract is its reliance on Gemini’s auction price for settlement. Gemini, a regulated U.S.-based exchange co-founded by the Winklevoss twins, conducts daily auctions for BTC/USD using a call market mechanism. Although Gemini’s trading volume represents only about 1% of global bitcoin turnover, its regulatory compliance made it an acceptable reference point for CFTC oversight.
This design prioritizes price integrity and auditability, even if it sacrifices broader market representativeness.
CME Bitcoin Futures: A Broader Market Benchmark
CME Group launched its bitcoin futures on December 18, 2017, offering an alternative with distinct structural advantages.
Key Parameters
- Contract Size: 5 bitcoins per contract
- Trading Hours: Nearly 24/5 — from 5:00 PM CT Sunday to 4:00 PM CT Friday, with a one-hour break daily
- Settlement: Cash-settled in USD
- Final Settlement Price: CME CF Bitcoin Reference Rate (BRR) at 4:00 PM London time on the last trading day
- Price Tick: $5 per bitcoin ($25 per contract) for outright trades
Price Limits:
- ±7% and ±13% circuit breakers based on prior day’s close
- Full halt at ±20%
The BRR: A Composite Benchmark
Unlike CBOE’s single-exchange model, CME uses the CME CF Bitcoin Reference Rate (BRR), which aggregates data from multiple major exchanges: Bitstamp, GDAX (now Coinbase Pro), itBit, and Kraken.
The BRR uses a Time-Weighted Average Price (TWAP) methodology over a one-hour window (3:00 PM – 4:00 PM London time), pulling trades from these platforms and applying volume-weighted median pricing across five-minute intervals.
While this approach enhances resistance to manipulation and reflects broader market conditions, critics note that the selected exchanges are primarily Western-based and underrepresent high-volume Asian markets like those in South Korea and Japan.
Nevertheless, the BRR was designed not just as a pricing tool but as a potential benchmark for global bitcoin valuation—a strategic move toward institutionalizing crypto price discovery.
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Comparative Insights: CBOE vs. CME
| Feature | CBOE XBT | CME BTC |
|---|---|---|
| Contract Size | 1 BTC | 5 BTC |
| Settlement Price Source | Gemini Auction | CME CF BRR (multi-exchange index) |
| Trading Hours | Limited night session | Near-continuous (23 hours/day) |
| Price Limits | None; pause mechanisms only | Tiered circuit breakers (±7%, ±13%, ±20%) |
| Market Focus | Simplicity and regulatory clarity | Liquidity, scalability, and global benchmarking |
While both contracts served as gateways into bitcoin for traditional investors, CME’s larger size and robust risk controls made it more attractive to institutional players, eventually leading to higher open interest and longevity compared to CBOE’s offering (which was later discontinued).
Why Bitcoin Futures Matter
Bitcoin futures fulfill several critical functions in mature financial ecosystems:
- Price Discovery: Transparent, order-driven markets help establish fair value.
- Risk Management: Holders can hedge against downside; traders can express bearish views.
- Regulatory Oversight: Provides a compliant entry point within existing legal frameworks.
- Market Legitimization: Institutional adoption signals growing acceptance of digital assets.
These contracts laid the foundation for later innovations such as options, ETFs, and spot-traded products.
Frequently Asked Questions
Q: Are U.S. bitcoin futures physically or cash-settled?
A: Both CBOE and CME bitcoin futures are cash-settled. No actual bitcoin changes hands—only cash payments based on price differences.
Q: Can retail investors trade these futures?
A: Yes, if they have access to a futures broker and meet margin requirements. However, due to complexity and leverage, they’re typically used by experienced traders.
Q: What is the significance of using Gemini’s auction price?
A: It provides a verifiable, tamper-resistant closing price from a regulated exchange—critical for auditability and regulatory approval.
Q: How does the BRR prevent price manipulation?
A: By using a time-weighted average across multiple exchanges over an hour, short-term spikes or wash trading are smoothed out.
Q: Were these futures successful long-term?
A: While CBOE discontinued its XBT contract in 2020, CME’s BTC futures grew steadily and now see significant daily volume, especially during volatile market periods.
Q: Do these futures influence bitcoin’s spot price?
A: Indirectly. While not causal, large positions in futures markets can reflect sentiment that affects broader market behavior.
Final Thoughts
The launch of U.S. exchange-traded bitcoin futures in late 2017 was more than just a product rollout—it was a signal that digital assets were being integrated into mainstream finance. Though differing in design, both CBOE and CME played crucial roles in establishing regulated access, transparent pricing, and institutional credibility for bitcoin.
As digital asset markets continue to evolve—with spot ETFs now approved and global interest growing—these early futures contracts remain foundational milestones.