Following the tanking of crude oil prices, FTX, a crypto derivatives exchange has now unveiled crude oil futures on their platform. This follows the oil market crash experienced earlier on April 20th as prices plummeted to below zero for the first time in history, analysts pointing to COVID-19 pandemic effects and Saudi-Russian price wars.
OIL futures are live! https://t.co/jrmHC8AOq3
— SBF (@SBF_Alameda) April 22, 2020
FTX exchange launches Oil Futures
The FTX oil future contracts will lapse to the spot of the West Texas Intermediate (WTI), and an additional $100 on top of every contract. The additional $100 has been added by FTX to serve as a buffer to cushion against any below zero settlements rates.
According to FTX CEO and founder, Sam Bankman-Fried, the recently added oil future contracts were in the best interests of the community as they were the most requested on their platform. The users have to however sail through level one KYC requirements to access the trades.
The new derivatives product is not available to every country with users from the following countries secluded from trading the contracts; US, UK, EU, UAE, Canada, Hong Kong, Singapore, Cambodia, Turkey and China. Most of the interest is expected to be generated from Asia highlighted Sam.
The new launch by FTX has received praise across the crypto world with crypto researcher, Larry Cermak, comparing the current steps by FTX to Binance early days. He wrote on Twitter,
“What I will say though, despite having some reservations about FTX, is that they are very similar to Binance early on when it comes to execution. They can get a product from the drawing board to production at speeds that no one can compete with.”
Oil prices tanked to negative for the first time
In particular, the WTI futures for May that reportedly expired this week, settled at -37.63 and further took a hit dropping to -40.32 for the first time in history. Most of the industry experts have cited COVID-19 has brought about movement restrictions that have affected billions of people globally. This has brought about high supply and low demand. Due to lack of storage spaces, the holders of the contracts are willing to pay just to offload them.
Notably FTX launched May 2019 has been always been ahead of their competitors launching new products every now and then. They just concluded their Bitcoin pegged tokens last week. In February they unveiled future contracts for the 2020 election candidates including incumbent president Trump.
FTX managed to raise just over $8 million in a seed funding round last year backed by high flying exchange Binance, VC Proof of Capital and Consensus Lab.