October 31, 2017

Announcing Segwit2x Hard Fork Policy

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UPDATED 31 OCTOBER 2017, 12:00 UTC

UPDATED 03 NOVEMBER 2017, 18:00 UTC

UPDATED 08 NOVEMBER 2017, 18:00 UTC - SEGWIT2X FORK CALLED OFF

This announcement refers to Futures traded on Crypto Facilities, NOT the BRR or products listed on CME Group.

A project called Segwit2x, born out of the May 2017 New York Agreement, is planning a bitcoin hard fork at block height 494784 (around mid November 2017).

Crypto Facilities' policy regarding the handling of this fork is as follows:

Deposits, Withdrawals and Bitcoin Balances on Crypto Facilities

Accounts with a bitcoin balance at the time of the fork will receive a credit of Segwit 2x tokens in the same amount if, at our discretion, the value of the Segwit 2x token is material and it is technically feasible and safe to secure it. Unrealized profit or loss from open Futures positions is not counted towards the bitcoin balance.

We reserve the right to halt withdrawals and increase the number of required deposit confirmations for as long before and after the fork as we deem it necessary to mitigate reorganisation risk.

Futures Trading on Crypto Facilities

For bitcoin Futures maturing after the fork, the Segwit2x token will not be included in the settlement price for a given contract (given by RR_XBTUSD) unless, for at least 2 UTC days out of the first 7 days after the fork, the Segwit2x token:

  • is listed on at least one exchange out of Bitfinex, Bitstamp, GDAX and itBit, and
  • contributes at least 15% to the combined trading volume of bitcoin and Segwit2x on the same exchanges, and
  • trades at 30% of the average combined price of bitcoin and Segwit2x on the same exchanges.

All conditions must be met prior to the Last Trading Time of a given contract.

We reserve the right to during any time pre- and post-fork to suspend futures trading and to mark to last trade prices or our own estimates of the fair current price.

Definitions

– “UTC day”: the time from 00:00 to 23:59 UTC

– “trading volume”: total combined USD notional trading volume across Bitfinex, Bitstamp, GDAX and itBit in bitcoin and Segwit2x, respectively, on a given UTC day

Example threshold analysis: Assume across Bitfinex, Bitstamp, GDAX and itBit, Segwit2x trades $100mm notional and bitcoin trades $200mm on the same UTC day. Then Segwit2x makes up 1/3 of combined volume and has fulfilled the 15% threshold on that UTC day.

– “price”: the volume-weighted average price across Bitfinex, Bitstamp, GDAX and itBit of bitcoin and Segwit2x, respectively, on a given UTC day

Example threshold analysis: Assume across Bitfinex, Bitstamp, GDAX and itBit, Segwit2x trades at a VWAP of $2000 and bitcoin trades at a VWAP of $6000 on the same UTC day. Then Segwit2x makes up 1/4 of the combined VWAP and has not fulfilled the 30% threshold on that UTC day.

Notes

– an earlier version of this post erroneously listed Kraken instead of Bitstamp in the list of exchanges

Rationale

Our fork policy aims to differentiate between forks that result in the creation of an altcoin and forks that create a true contender to bitcoin or become “bitcoin”. We therefore assess the materiality of forked tokens based on market price and trading volume thresholds. The chosen thresholds would have resulted in the exclusion of recent bitcoin forks such as Bitcoin Cash while assuring that our Futures would continue to track what the community generally regards as “bitcoin” in a scenario where a fork becomes widely adopted as such.

FAQs

Will you pay out Segwit2x even if it is not included in the reference rate?

Even if Segwit2x is not included in the reference rate, we may still regard it as material enough to pay out Segwit2x balances.

Are you planning to list Futures on Segwit2x?

We are currently not planning to list Futures on Segwit2x right after the fork.

Please reach out to [email protected] if you have any comments or questions.

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Crypto Facilities is a group of companies which is in turn a member of the Payward, Inc. group of companies. Payward, Inc. is the owner and operator of the Kraken Exchange, a venue that facilitates the trading of cryptocurrencies.

Crypto Facilities Ltd is authorised and regulated by the Financial Conduct Authority (FRN 757895) and registered in England with registered number 9172128 and registered office at 6th Floor, One London Wall, London, United Kingdom, EC2Y 5EB.