Markets
CME’s plan to offer Bitcoin spot trading opens up a “world of opportunity” for Wall Street – DL News
- CME Group plans to offer Bitcoin spot trading on its futures exchange, according to a report.
- This move marks further encroachment by Wall Street into crypto.
- Hedge funds and pension funds are more likely to use these services than those offered by Coinbase, according to one analyst.
CME Group’s plan to offer Bitcoin spot trading on its futures exchange allows it to attract customers from local crypto companies, marking further Wall Street encroachment into the crypto space.
The exchange has been conducting discussions with traders looking to increase their knowledge about crypto, 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 influx of new money into the sector.
“It’s huge,” said Jonathan de Wet, chief investment officer of digital asset trading firm Zerocap. DL News. “Spot margin on CME opens up a world of opportunity for TradFi institutions.”
While still in the planning stages, 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.
Although still under study, CME offering spot trading would provide investors with a one-stop shop to spot margin trading on CME, opening up the possibility for Wall Street to take a larger share of Bitcoin outside ETFs.
Spot margin trading allows entities to borrow funds to increase the size of their positions in the spot market, leveraging their trades and potentially magnifying gains and losses.
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De Wet said providing more regulated institutional access points would likely fuel adoption among a risk-averse investor class.
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 United States under a regulated banner following its listing on Nasdaq in 2021.
Others include Kraken, which is regulated by the Financial Crimes Enforcement Network, and Gemini, which also answers to the New York State Department of Financial Services.
Hedge funds and pension funds have already seized the opportunity to delve deeper into crypto this year.
And the Wisconsin State Investment Council bought $99 million worth of iShares Bitcoin Trust – BlackRock’s Bitcoin spot exchange-traded fund – using it and nine similar ETFs launched in the US this year.
CME did not return DL News” request for comment.
Sebastian Sinclair is markets correspondent for DL News. Do you have any advice? Contact Seb at sebastian@dlnews.com.