What Exactly Are Futures or Forward Contracts ?
A futures contract (or futures) is a financial instrument that provides protection against price fluctuations of digital assets. It is typically used to hedge against the risk of price increases or decreases across all markets including cryptocurrencies, forex, commodities, and more.
This contract involves two parties : someone looking to hedge their position and another who agrees to buy or sell at a predetermined price.
Futures contracts are characterized by 3 main elements :
- A contract on a future value
- A contract for a defined quantity of value
- A contract that ends on a predetermined date
For futures trading or forward contracts, closure occurs on a predetermined date. This allows users to know in advance when they will recover their investments.
This means that trading orders don’t only generate profits but can also result in losses. You must have sufficient experience to be confident in the position you take (whether long or short).
What’s the Difference Between Futures Trading and CFD Trading ?
Futures trading involves buying or selling forward contracts on stock indices, shares, currencies, commodities, cryptocurrencies, and other assets. These are actual contracts to buy or sell products. They allow you to buy or sell goods or services at a price and date set in advance.
CFD trading, on the other hand, corresponds to buying and selling “contracts for difference.” Like futures contracts, they allow you to exchange the price difference of any digital asset between the moment the contract is signed and when it closes.
The main difference between futures trading and CFD trading lies in their expiration dates. Unlike futures contracts, CFDs don’t have predetermined expiry dates, so you decide when to close the contract.
Additionally, futures trading takes place exclusively on exchanges, whereas CFDs are traded between you and your broker.
Why Are Binance Futures No Longer Available in United States ?
The Binance platform is considered one of the best among exchange platforms. However, since August 2, 2022, it has stopped offering futures trading in United States. This is an uncomfortable position for many american traders on the platform.
Indeed, the company is terminating certain activities (futures contracts, dual investment, options, leveraged tokens) due to European legislation. For tax and legal reasons, Binance’s “futures” product poses a particular difficulty in that it is perpetual.
By nature, a contract has a time limit. However, with Binance futures, the contract does not expire and therefore has no term. This means that delivery of the underlying asset never takes place.
This is sufficient for English law not to recognize Binance’s “futures” product as a “contract.”
In this context, it does not strictly comply with the approach of the monetary and financial code. Indeed, the exchange giant has been targeted by regulators worldwide for several years. Binance is therefore forced to adapt its offerings in many countries, particularly across Europe.
Which Platform to Use for Trading Futures ?
There are many platforms that allow futures trading, but we’ve selected one of the most reliable and interesting platforms based on its features and user reviews.
Bitget : The Best Alternative for Futures Trading in United States
Advantages
- ✅ Wide selection of cryptocurrencies
- ✅ Extremely low trading fees from 0.02% to 0.6%
- ✅ Copy trading capability
- ✅ More than 100% of user funds are verifiable thanks to the Merkle-Tree proof of reserves, viewable 24/7
- ✅ Top 5 global exchanges by trading volume, with over $5 billion USD daily
- ✅ EUR deposits and withdrawals via bank transfer
- ✅ Instant cryptocurrency deposits and withdrawals for Spot Bitcoin, Ethereum (USDT), or Solana (USDC)
- ✅ More than 5 years of existence, already well-established in Asia and gradually becoming more known worldwide
- ✅ Pleasant branding, good user interface, and renowned advertising partners
Disadvantages
- Less established reputation than industry leaders
Thanks to the wide diversity of its services and features, Bitget presents itself as one of the best exchange platforms for futures trading in United States.
➡️ Discover our complete tutorial on the subject :
What Services Does Binance Currently Offer to Traders in United States ?
The services provided by Binance remain varied. This is actually one of its strengths, as it allows traders to access a wide range of financial services. The major advantage is that it positions itself as a comprehensive platform for cryptocurrency investment.
Services currently offered by Binance include :
- cryptocurrency trading
- cryptocurrency savings
- staking and farming
- NFT purchases
Cryptocurrency Trading on Binance
The English term “trading” actually means “exchange.” Trading is very often associated with buying and selling assets to make a profit or incur losses. Via the Binance platform, you can exchange hundreds of different cryptocurrencies with each other.
Cryptocurrency Savings with Binance Earn
Binance Earn is a very popular feature in United States. The financial lexicon defines the English expression “earning” as “profit.” The Binance platform offers traders savings accounts and “flexible earning” programs.
These allow users to store cryptocurrencies in this program and earn daily interest. Interest rates can reach up to 10% on stablecoins like USDT or BUSD.
You can withdraw your cryptocurrencies at any time to redirect them to your main wallet. A boon for traders looking for easy and secure investments.
Staking and Farming Your Cryptocurrencies
Crypto staking is a more eco-friendly version of the verification consensus (proof of stake). It involves token owners affiliated with “proof of stake” blockchains allowing the control of transactions on these blockchains.
Simply by making their capital entirely available to the blockchain, owners receive cryptocurrency remuneration in return.
Binance’s program allows staking of many cryptocurrencies for a fixed period : 21, 30, 60, 90 days. Traders then receive interest ranging from 1 to 20% of the crypto they stake. These interests depend on the cryptocurrency and the staking duration.
As for farming, it involves investors who pool cryptocurrencies in a liquidity pool. They receive tokens in exchange, usually different from those made available. Of course, Binance also offers its users a farming feature.
Buying Non-Fungible Tokens (NFTs) on Binance
A non-fungible token (NFT) is a type of unique digital identifier that, recorded in a blockchain, is impossible to reproduce, substitute, or divide.
It serves to legitimize the authenticity and ownership of an asset that is also digital. Binance has recently opened an NFT category on its platform.
Investors can thus buy NFTs from certain prestigious collections.
Other Solutions to the Halt of Binance Futures
As you’ve understood, trading on Binance Futures is a method of trading cryptocurrency futures contracts with leverage, allowing traders to speculate on future price movements of these assets. This option is no longer available in Europe, so how can you continue trading cryptocurrencies on Binance? Here are some solutions that some of you may be able to use.
Margin Trading
Margin trading, or margin trading in English, is a trading method that allows traders to borrow funds from their exchange platform to increase their purchasing power.
The margin represents a percentage of the total order value. It’s the initial investment required to initiate a margin trade. It’s closely related to the concept of leverage, which allows traders to control a larger position with a small amount of money.
In other words, margin trading accounts are used to create leveraged trades, where leverage is defined as the ratio between borrowed funds and the invested margin.
For example, a trader wishing to open a $100,000 transaction with 10 :1 leverage will need to commit $10,000 of their capital. Traders must understand that margin trading can involve increased risk due to leverage, and prudent risk management is essential for success.
It’s possible to create a margin trading account via the Binance United States exchange platform to be able to trade with leverage.
Opening a Binance Pro Account
You can open a professional account on Binance, which is an interesting option if you want to access Futures trading features. To do this, you need to own a company abroad in a country where Futures are accepted, such as Gibraltar or Dubai in the United Arab Emirates, to name just a few.
To open a professional account on Binance, you’ll first need to provide the necessary documents to verify the legal existence of your company, as well as your personal information and contact details.
Then, you’ll need to provide proof of address and proof of identity, in accordance with Binance’s verification requirements. It’s important to note that verification requirements may vary depending on the jurisdiction where your company is established. Once your professional account is approved, you can start trading on cryptocurrency markets.
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