The Chicago Mercantile Exchange (CME) is reportedly considering entering the Bitcoin trading market to take advantage of the increasing demand from Wall Street fund managers. According to the Financial Times, the CME has been in discussions with crypto traders to establish a regulated platform for buying and selling Bitcoin. While plans have not been finalized, this move by the CME demonstrates the ongoing interest of Wall Street giants in the cryptocurrency space, especially following the approval of Spot Bitcoin exchange-traded funds by the SEC in January.
If the CME proceeds with its Bitcoin trading plan, it intends to offer the service through EBS, a Swiss currency trading platform known for its strict regulations on crypto asset trading and storage. However, a spokesperson for the CME Group declined to comment on the matter.
The addition of spot Bitcoin trading to the CME’s existing Bitcoin futures offerings would create opportunities for investors to engage in “basis trades,” as stated by the FT. Basis trades involve borrowing money to sell futures contracts while simultaneously buying the underlying Bitcoin, with the goal of profiting from the price difference between the two. This strategy is already widely used in the US Treasury market, with a significant portion executed on CME platforms.
The CME has solidified its position as one of the world’s top Bitcoin futures markets, surpassing Binance. This growth reflects the increasing interest from institutional investors looking to capitalize on Bitcoin’s volatility. A study conducted by Bitwise Asset Management in 2020 found that the CME Bitcoin futures market consistently outperforms the spot market.
To enhance transparency and trust in cryptocurrency trading, the CME Group has partnered with CF Benchmarks to develop standardized reference rates and spot price indices for popular cryptocurrencies like Bitcoin and Ether. This collaboration aims to provide a clear and reliable overview of cryptocurrency values.
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