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Cboe Digital Receives Approval to Expand Crypto Futures Products for Bitcoin and Ether, Calls It ‘A Win for US Industry’


On Monday, the US Commodity Futures Trading Commission announced that it had approved an application from Cboe, one of the largest US options exchanges, to offer futures contracts. Margin hybrid for Bitcoin and Ether.

At a time when segments of the US crypto industry are retreating abroad amid allegations of “regulation by enforcement“Cboe Digital President John Palmer described this development as a step forward in times of uncertainty.

“We are seeing an expansion within the framework of the United States, not a contraction,” he said. Luck in an interview on Monday. “This is a really good testament to the hard work of both sides, both the Cboe Digital side and the regulator side.”

A futures contract is a type of derivative contract in which customers speculate on the price movements of assets like Bitcoin and Ether—a popular instrument for institutional investors, but one that is growing in popularity. increasingly popular with retail investors, especially in the crypto space.

While Cboe Digital previously offered crypto futures, it does not allow margin trading. In practice, this means that traders must list the full price of Bitcoin in order to buy or sell futures contracts. With margin contracts, they only need to post a small portion at first, require less money upfront, and allow strategies to potentially earn higher returns on deployed capital.

While other platforms, including CME Groupalso offers margin futures contracts for crypto assets, Palmer said that Cboe’s new approval is unique as it also offers spot trading under the same entity, where users are trading. at the current price of assets like Bitcoin and Ether.

As he explains, this arrangement can benefit traders such as market makers—who provide liquidity to exchanges—as well as other customers looking for high performance. than for other strategies like fundamental trading, where users look for the price difference between a spot contract and a futures contract.

Leaving FTX

As Palmer explained, Cboe’s model stands in stark contrast to that of failed crypto exchange FTX, which sought approval for a different approach from the CFTC for futures contracts. With Cboe, users cannot buy futures contracts directly from the platform, but must instead go through futures commission sellers or FCMs—intermediaries who buy or sell contracts on behalf of customers.

in one application 2022, FTX has sought to eliminate the middleman and allow customers to deposit directly onto FTX without any broker. This process, known as decentralization, has been widely criticized by players in the traditional financial sector for giving retail investors easier access to risky and placing investment products. more responsibility in the hands of the platforms.

“This is a very traditional centralized model,” says Palmer of the Cboe approach. “That model has stood the test of time.”

In a statement released after Cboe’s approval, CFTC commissioner Christy Goldsmith Romero agreed with this view, citing Cboe’s over 50 years of experience operating exchanges.

“The proposed FTX model was never approved by the Commission, but it poses risks to clients in terms of bankruptcy priority, other customer protections, and financial stability,” she said.

The Future of Cryptocurrency in the US

Cboe approval comes at a time when crypto companies include Coinbase And Gemini is moving abroad to launch derivatives exchanges. While Palmer pointed out that their main motivation is to offer a popular yet unapproved type of crypto derivatives contract in the country called perpetual contracts, he praised the work of regulators in the country. USA

“From our perspective in the US, with or without clear regulation regardless of the regulator, we feel very comfortable working with them to further develop this asset class. responsibly,” he said Luck. He described the approval as “a win for US industry.”

Cboe Digital plans to launch margin futures contracts for Bitcoin and Ether in the second half of 2023.



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