Mark Cuban Says Bitcoin Futures Approval Is `Generally Positive'

(Bloomberg) -- Billionaire venture capitalist Mark Cuban says bitcoin futures trading on major exchanges will potentially have a positive impact on the cryptocurrency.

CME Group Inc., the world's biggest exchange owner, and smaller venue Cboe Global Markets Inc., known for its VIX volatility products, were allowed to offer the products after pledging to U.S. regulators that they comply with the law.

“It will be interesting. I think it's generally positive,” Cuban said in an email. “What they charge is critical. Transaction costs are relatively high for BTC. If this pushes transaction costs lower, it will be a benefit to the BTC market.”

Transaction costs, which include the fees that cryptocurrency exchanges and custody services charge, could decline if demand for the digital asset increases as a result of futures trading, said Naeem Aslam, a chief market analyst at TF Global Markets in London.

“How they will buy, sell , hold and manage the BTC is critical, Cuban said. “What they charge is critical.”

The CME contract will settle in cash and use a daily price from the CME CF Bitcoin Reference Rate, which uses prices from exchanges Bitstamp, GDAX, itBit and Kraken. The contracts will be priced at a premium to standard equity index futures, and CME Clearing will initially require a 35 percent margin, though that's subject to change, according to the CME website. Cboe futures will also be cash settled based on the Gemini exchange.

Read More: Bitcoin Futures Will Start as Regulators Rush to Catch Up

Cuban, who is a majority owner of the Dallas Mavericks basketball team and star of startup investing theme show “Shark Tank,” invested in cryptocurrency hedge fund 1Confirmation, as well as in bitcoin and smaller digital tokens.

Tim Draper, another prominent billionaire venture capitalist involved with cryptocurrencies, was even more enthusiastic.

“Bitcoin is a currency and should be treated as such,” Draper, whose Draper Associates backed Hotmail, Skype and Tesla Inc., said in an email. “It makes perfect sense that a currency should be able to be hedged.”

Draper bought more than 30,000 bitcoin when the U.S. government auctioned off the virtual currency seized from Silk Road, the online market-place of illegal goods, in 2014, and has made his bullish bitcoin case on Bloomberg TV wearing a tie with a print of the cryptocurrency's yellow B logo. So it may not come as a big surprise that he's echoing many bitcoin investors right now saying:

“Bravo CBOE! Bravo CME!” he wrote.

To contact the reporter on this story: Camila Russo in New York at crusso15@bloomberg.net.

To contact the editors responsible for this story: Michael P. Regan at mregan12@bloomberg.net, Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Andrew Dunn

©2017 Bloomberg L.P.