In an official communication, the Chicago Mercantile Exchange (CME) revealed plans to launch spot Bitcoin trading on its futures exchange. The CME’s latest development demonstrates its commitment to joining other Wall Street makers to gain exposure to crypto assets.
A source privy to the information confirmed that the CME has been holding intense discussions with traders seeking to invest in crypto assets.
CME Futures Exchange Plans to Introduce Spot Bitcoin Trading
According to the Financial Times, three individuals familiar with the situation confirmed that CME intends to offer crypto assets in a regulated market. Even though the CME crypto bid has not materialised, the Chicago Group plans to explore new opportunities in the crypto industry.
Following the approval of Bitcoin exchange-traded funds (ETFs), institutional and retail clients have shown a growing interest in these products. Therefore, the CME expected that the launch of Bitcoin spot trading on its future exchange would allow traders to generate returns from basis trades.
The basis trade approach has become a common trading strategy professional traders use to reap considerable returns. The process involves borrowing money to acquire underlying assets and selling futures to generate profits by exploiting the difference between the two assets.
The CME projects launching spot Bitcoin trading on its futures exchange will allow the derivative marketplace to offer Wall Street players easy access to crypto assets.
Following the resurfacing of the Bitcoin bulls, vital financial institutions showed interest in crypto assets. If the CME spot Bitcoin trading plans actualize, the Chicago Group will join the authorized 11 spot Bitcoin ETFs in the United States.
The announcement came when diverse investor have adopted cryptos as a tradeable asset. The growing adoption of Bitcoin ETFs has challenged renowned hedge funds, including Bracebridge Capital and Wisconsin Investment Board, to invest millions in acquired-the-spot crypto ETFs.
Growing Demand for Spot Bitcoin ETFs
In an interview with the DL News, the chief investment officer at Zerocap, Jonathan de Wet, described the CME spot Bitcoin ETF offer as a monumental step for the company.
The executive stated that spot margining on Chicago Group offers traditional finance (TradFi) a world of opportunity. He projected that CME’s new offering would offer investors great access to spot Bitcoin products that would promote the adoption of crypto assets.
In support of de Wet’s remarks, the chief investment officer at Merkle Tree Capital, Ryan McMillin, argued that hedge funds and other asset managers would prefer to acquire spot Bitcoin ETFs from CME rather than crypto exchanges such as Coinbase.
With the growing interest in crypto among institutional clients, CME has outpaced the world’s largest crypto exchange, including Binance, in the Bitcoin futures market. The Chicago Group ranks among the world’s largest futures exchanges, while global crypto exchanges dominate the spot crypto market.
CME Seeks to Gain Dominance in Spot Bitcoin Trading
The CME report demonstrates that hedge funds and professional traders are the top users of futures exchange. He admitted that most investment and wealth management companies have established stronger relationships with CME than Coinbase and other crypto exchanges.
The executive anticipates the CME will become a one-stop shop for investors to engage in spot margin trades. The CME’s plans to launch a spot trading market came at a time when its top rival, the CBOE global market, revealed plans to abandon spot market trading due to a lack of a comprehensive regulatory framework for digital assets in the United States.
The CBOE Digital Spot Market claimed it has been losing money due to a lack of regulatory clarity in the US. To remain profitable, the CBOE plans to redirect funds to promising ventures and suspend the operation of its Digital Spot Market by Q3 of 2024.
The spot Bitcoin ETFs rank among the most successful crypto projects, with over $12.15 billion in inflows since the beginning of this year. The Bitcoin ETFs have contributed significantly to the mainstream adoption of digital assets and propelled most crypto assets to gain bullish momentum.
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