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The Chicago Mercantile Exchange eyes the launch of Bitcoin trading
Last Updated: May 16, 2024 2:28am EDT | 1 minute read
The Chicago Mercantile Exchange (CME) is reportedly planning to launch Bitcoin trading, seeking to capitalize on the growing demand for Bitcoin among Wall Street fund managers this year.
THE The Financial Times reports it The CME began talks with cryptocurrency traders on Thursday to offer a regulated market for buying and selling Bitcoin.
The plans are not yet finalized. But the CME’s potential Bitcoin trading plan points to a continued push by Wall Street giants into the crypto space. This follows the Green light to the SEC in January for Spot Bitcoin exchange-traded funds.
According to the FT, it plans to offer its potential Bitcoin spot trading business via EBS. It is a Swiss currency trading platform known for its strict regulations on cryptocurrency trading and storage.
A spokesperson for CME Group declined to comment on the matter.
Chicago Mercantile Exchange spot trading to fuel ‘basic operations’
The addition of Bitcoin spot trading to CMEs Existing Bitcoin futures offers it would open the door for investors to easily carry out “basic operations”, according to the FT.
Basic operations involve borrowing money to sell futures contracts and simultaneously buying the underlying Bitcoin, with the aim of profiting from the small price difference between them. This strategy is already a staple in the U.S. Treasury market, with a significant portion taking place on ECM platforms.
CME dethrones Binance as institutions dive
CME has grown to become one of the world’s leading Bitcoin futures markets, dethrone Binance. This surge reflects a renewed wave of interest from institutional investors looking to capitalize on Bitcoin’s volatility.
A Bitwise Resource Management Study 2020 found that the CME Bitcoin futures market consistently outperforms the spot market.
In an effort to increase transparency and trust in cryptocurrency trading, CME Group has joined forces with CF Benchmarks. Together, they developed standardized reference rates and spot price indices for popular cryptocurrencies such as Bitcoin and Ether. This collaboration provides a clear and reliable picture of cryptocurrency values.