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They will also be cash-settled, similar to CME's bitcoin futures. We are committed to encouraging fairness and liquidity in the bitcoin market.

The CBOE Futures Exchange will start trading bitcoin futures Sunday, making it the first traditional exchange to allow investors to bet on the future price of the digital currency.

CME, the world's biggest exchange owner, and smaller venue Cboe, known for its volatility products, were allowed to offer the products Friday after pledging to US regulators that they comply with the law.

Bitcoin hit a record above US$11,400 last Wednesday, but then lost 20% of its value in the following 24 hours. "At launch, our new Bitcoin futures contract will be subject to a variety of risk management tools, including an initial margin of 35 percent, position and intraday price limits, and a number of other risk and credit controls that CME Group offers on all of its products", Duffy said. But there are a couple of differences between bitcoin futures trading at the two exchanges. The first bitcoin futures contracts on a regulated USA exchange are set to launch on Sunday. At the time in August, the CBOE was working with New York-based bitcoin exchange Gemini, which is run by investors Cameron and Tyler Winklevoss, ahead of the launch.

Bitcoin has been a hot commodity for investors.

Bitcoin's rapid rise from less than US$800 in December a year ago to more than US$11,000 this week on Coindesk has stoked fears that it is a pricing bubble that could leave recent investors worse-off.

Following the launch of these products, many analysts predict that the Securities and Exchange Commission (SEC) will grant approval to the first exchange-traded fund (ETF) that invests in bitcoin futures contracts, potentially turning bitcoin into a mainstream financial instrument and portfolio asset.

The CBOE's announcement brings bitcoin one step closer to institutional traders, who are expected to be the primary customers for such trades.