Why Is the Risk of "Forks" a Consideration in Physically-Settled Crypto Futures? ⎊ Path

Why Is the Risk of “Forks” a Consideration in Physically-Settled Crypto Futures?

A blockchain "fork" creates a new version of the cryptocurrency. For a physically-settled contract, the clearinghouse would need a clear, pre-defined policy on which version of the asset (the original or the new forked coin) is the deliverable asset.

This creates logistical and financial uncertainty. Cash settlement avoids this by simply referencing the price of the original, dominant chain's asset.

What Is the Difference between “Soft Forks” and “Hard Forks” in Blockchain Governance?

Which Type of Settlement Is More Common for Cryptocurrency Futures and Why?

Can a Promise of Future Cryptocurrency Transfer Constitute Consideration?

Why Is the Funding Rate Typically Exchanged Every Eight Hours?

How Does a Physically Settled Crypto Future Differ in Tax Timing from a Cash-Settled One?

Why Might a Derivative Trader Prefer Cash Settlement over Physical Settlement?

How Does a “Cash-Settled” Crypto Derivative Differ from a “Physically-Settled” One?

What Are the Key Differences in Settlement Price Calculation between Physically-Settled and Cash-Settled Futures?