Why Are Cash-Settled Futures Often Preferred for Cryptocurrency Derivatives?

Cash settlement is preferred for cryptocurrencies primarily due to the logistical challenges of physically delivering the digital asset. Transferring large volumes of crypto can be slow and incur high network fees.

Furthermore, regulatory clarity surrounding the custody and delivery of crypto assets is still evolving. Cash settlement simplifies the process, reducing operational risk and making the contracts more accessible to a wider range of institutional and retail traders.