Cboe Digital, the digital-asset exchange operated by Cboe Global Markets Inc., has been granted permission by the Commodity Futures Trading Commission (CFTC) to introduce margined Bitcoin and Ethereum futures contracts. This regulatory green light opens up a host of new opportunities for traders seeking exposure to these leading cryptocurrencies.
Today the CFTC approved Cboe Clear Digital, LLC to clear margined digital asset futures. Learn more: https://t.co/tWLd2F7E2h
— CFTC (@CFTC) June 5, 2023
Previously, Cboe Digital only offered fully collateralized trading of crypto futures, which required traders to provide the entire contract value upfront. However, with the newly approved margined trading, traders will be able to enter positions with significantly less capital.
The physical settlement feature of these contracts eliminates the need for intermediaries to take custody of the digital assets. As a result, financial institutions can seamlessly access Bitcoin and Ether futures, ensuring a smoother integration of digital assets into their existing operations.
Cboe Digital: A Pioneer in US Digital Asset Trading
Moreover, Cboe Digital President John Palmer highlighted the advantage of the exchange’s spot market, stating that participants no longer need to be burdened with the responsibility of securing the physical assets themselves.
“Derivatives are a time-tested and valuable tool that enable investors to gain market exposure and manage their risk,” John Palmer asserted in a statement.
Cboe Digital stands out as the only US-registered exchange offering both spot and derivatives trading of digital assets such as Bitcoin, Bitcoin Cash, Ether, Litecoin, and USDC. The exchange also operates its own clearinghouse. With a client base primarily composed of professional and institutional players, Cboe Digital has gained investment from prominent firms such as Galaxy Digital, DRW, Interactive Brokers, and Robinhood Markets Inc.
Positive Move Amid Regulatory Uncertainty
Cboe Digital’s approval to offer margined futures contracts for Bitcoin and Ether is considered a significant win against a backdrop of regulatory uncertainty in the US crypto market. As institutional investors seek more clarity and regulatory compliance, this development represents a positive step forward.
CFTC Commissioner Christy Goldsmith Romero commended Cboe Digital’s approach, emphasizing the importance of operating within the existing traditional market structure to ensure the mitigation of risks associated with the digital asset market. She said,
“Cboe’s futures contracts will continue to be listed, traded, and cleared within the traditional derivatives market structure and CFTC regulatory framework, limiting certain risks.”
By expanding its trading offerings, the exchange invites new participants and traditional financial firms to access the digital asset market securely and efficiently. With the potential for increased liquidity, broader market participation, and enhanced risk management, Cboe Digital’s margin trading approval holds the promise of a more vibrant and resilient crypto market.