The Brazilian Stock Exchange Will Launch Bitcoin and Ethereum Futures

B3, the Brazilian exchange, has confirmed that within six months it intends to launch its first official product targeting the cryptocurrency market – Bitcoin (BTC) futures trading. This was announced by the group’s chief financial officer, Andre Milanese, during a conference call on Monday.

Milanez didn’t provide many details about how the product works. It is not yet known whether B3 will form a partnership or will offer to trade bitcoin futures directly, but the launch schedule for this product is set to be relatively short. “We plan to launch bitcoin futures in the next three to six months,” he said.

Currently, in Brazil, institutional and individual investors can trade 11 ETFs through B3 with crypto exposure, including Empiricus’ CRPT11 with Vitreo; Investo’s NFTS11; QBTC11, QETH11, and QDFI11 are all from QR origins, and META11, HASH11, BITH11, ETHE11, DEFI11, and WEB311 are all from Hashdex. In addition, in Brazil there are more than 25 investment funds approved by the Securities and Exchange Commission (CVM) that offer different types of exposure to the crypto-asset market.

In January, Jochen Mielke de Lima, Director of IT at B3, stated that the Brazilian exchange will launch several products with exposure to cryptocurrencies in 2022, including bitcoin futures and ethereum (ETH) contracts.

At the time, the CEO highlighted that the Brazilian exchange has been looking closely at the cryptocurrency market from a technological point of view since 2016.

According to the statement, B3 only needed to settle the question of whether the negotiations would take place against the US dollar or against the Brazilian real. Futures contracts need a benchmark, so if the team chooses the native Brazilian currency, it will be necessary to create an index of crypto-assets in real – something that does not exist now.

The B3 delegate also said that it is exploring ways to provide data inputs to the country’s central bank digital currency, or CBDC.

B3 and Cryptocurrency

In addition to BTC and ETH futures contracts, B3 also intends to provide services to national crypto exchanges and to be a kind of “centralization” of custody and settlement operations, according to Jochen Mielke de Lima:

“We have around 30 national cryptocurrency exchanges, apart from international exchanges that operate here. We can provide a service to facilitate and standardize their operations. I think they have something to explore in providing custody services and in the settlement process.”

Mielke also stated that the cryptocurrency market is very similar to a regulated stock market, as it includes issuance, trading, settlement and custody. It is thus stated that B3 can help solve common problems between exchanges.

“We identify points of friction that we can help resolve, such as helping our customers provide the best access to their end customers,” he said.

In addition, B3 plans to launch other products based on cryptocurrency and blockchain to launch in 2022. Among them, there are studies on a platform for tokenizing assets, trading cryptocurrencies, custodians of cryptocurrencies, among others.

“Trading and access to liquidity centers: this means mitigating the complexities of accessing a fragmented, global, 24/7 market; custodianship of digital assets: providing trusted custody (and thus, the purpose of blockchain transactions); over-the-counter facilities: in this way, you want Providing more security, efficiency in movement and DVP of digital assets; capital efficiency gains: thus, it wants to mitigate the nature of pre-funded operations and crypto-as-a-service: make it easier for clients to explore the crypto market with low friction,” highlighted B3.

For 2022, B3 representatives said they expect the official launch of the reinsurance platform. This will run on the Corda blockchain R3, a partnership between the exchange and IRB Brazil.