Bitcoin
CME’s Plan to Offer Bitcoin Spot Trading Opens a ‘World of Opportunity’ for Wall Street – DL News
- CME Group is planning to offer Bitcoin spot trading on its futures exchange, according to a report.
- The move marks a new encroachment by Wall Street into crypto.
- Hedge and pension funds are more likely to use these services than those offered by Coinbase, an analyst says.
CME Group’s plans to offer spot trading for Bitcoin on its futures exchange set it up to win over customers from native crypto firms, marking a new invasion by Wall Street into the crypto realm.
The exchange has been conducting negotiations with traders looking to delve deeper into crypto, the Financial Times reported Thursday, citing three people with direct knowledge.
It’s a sign that more Wall Street firms are seizing opportunities in crypto after BlackRock’s Bitcoin ETF sparked a record flood of new money into the sector.
“This is big,” said Jonathan de Wet, chief investment officer at digital asset trading firm Zerocap. DL News. “Spot margin on CME opens up a world of opportunities for TradFi institutions.”
Still in the planning phase, Ryan McMillin, chief investment officer at crypto fund manager Merkle Tree Capital, said DL News that hedge funds, pension funds and sovereign wealth funds are more likely to engage with CME rather than crypto-native companies like Coinbase.
The reason? These companies do not have the same relationship with Coinbase as they do with CME.
While still under consideration, the CME spot trading offering would provide a one-stop shop for investors to trade spot margin on the CME, opening up opportunities for Wall Street to bet more on Bitcoin outside of ETFs.
Spot margin trading allows entities to borrow funds to increase the size of their position in the spot market, leveraging their trades and potentially amplifying gains and losses.
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De Wet said providing more regulated institutional access points would likely encourage adoption among a risk-averse class of investors.
He pointed to an “exhaustive process” for large fiduciary investors to undergo due diligence as the reason they would opt for CME’s offering.
Coinbase is one of the few cryptocurrency exchanges operating in the US under a regulated banner following its Nasdaq listing in 2021.
Others include Kraken, which is regulated by the Financial Crimes Enforcement Network, and Gemini, which also reports to the New York State Department of Financial Services.
Hedge and pension funds have already seized the opportunity to dive deeper into crypto this year.
And the Wisconsin State Investment Board bought $99 million worth of the iShares Bitcoin Trust – BlackRock’s Bitcoin exchange-traded fund – based on it and nine similar ETFs launching in the US this year.
CME did not return DL News‘request for comment.
Sebastian Sinclair is a market correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.