CME Group’s Reported Plans for Spot BTC Trading Shows TradFi’s Growing Acceptance of Digital Assets

June 10, 2024

The CME Group’s reported plans to launch Bitcoin trading will enhance the recognition of BTC and the broader digital assets market within traditional finance and attract a broader range of investors, analysts have said.

The group’s plans, first reported by the Financial Times last month, are yet to be confirmed. The FT said the plan was to launch a Bitcoin trading platform through the group’s Swiss-based EBS currency trading venue.

Matteo Greco, a research analyst at the publicly listed digital asset and fintech investment business Fineqia International (CSE:FNQ), told The Shib Daily that spot BTC trading on the CME would offer an important platform for trading the asset. “CME is the largest market for BTC futures, surpassing even Binance, the largest digital assets exchange by a wide margin,” he pointed out.

“It would enhance the recognition of BTC and the broader digital assets market within traditional finance, signaling greater acceptance and integration of digital assets in conventional financial operations.”

The CME Group discussed its plan with traders who are interested in buying and selling the crypto asset on a regulated platform, the FT reported citing unnamed sources with direct knowledge of the talks.

A dominant player in the derivatives market catering to hedge funds and proprietary traders, the CME Group has seen its Bitcoin futures open interest skyrocket to over $8.5 billion, doubling in just a year. This explosive growth highlighted the surging institutional demand for exposure to cryptocurrencies.

The CME Group’s move, if true, would leverage EBS’s robust regulatory framework governing crypto trading and storage, providing institutional investors with a trusted and secure avenue for direct Bitcoin ownership, the report said.

“This is a significant development,” Adam Berker, senior legal counsel at the global payments infrastructure platform Mercuryo, told The Shib Daily. “From a regulatory standpoint, I do not believe that this initiative should encounter any major issues. Bitcoin is widely accepted as a commodity rather than a security, which means there are no particular disagreements about its status among regulators.”

Finegia’s Greco added that “introducing spot BTC trading on CME would inject substantial liquidity, aiding in price discovery and price stability. This increased liquidity would tighten spreads, providing additional stability to Bitcoin’s price.”

Spot Bitcoin trading on a reputable platform like the CME will boost confidence in Bitcoin and other cryptocurrencies, Berker, an international lawyer with expertise in cryptocurrency, anti-money laundering, and blockchain regulations, said. “While it could be said that the market already has spot Bitcoin ETFs, they are only intermediary products and involve buying shares of funds that purchase BTC.”

“Providing a direct trading option on a major exchange will enhance market accessibility, making it easier for new investors to enter the crypto trading scene,” Berker added. “I would expect this to further increase trading volumes and attract a broader range of investors, thus fostering greater market participation and liquidity.”

Since its inception in January, the Bitcoin exchange-traded funds in the United States has captured significant attention and capital.

ETF inflows are a barometer for institutional and retail sentiment toward cryptocurrencies, and highlight a broader trend of mainstream adoption and the evolving landscape of digital asset investment opportunities.

The 11 spot Bitcoin ETFs in the U.S. have collectively amassed a total net inflow of $15.56 billion since their launch. A recent streak of net inflows indicates a recovery from the stagnation observed in April and May, although the current inflows are still lower than the peak levels recorded in March. 

Notably, BlackRock’s IBIT leads the charge, drawing in significant net inflows, while other ETFs like Fidelity and VanEck also reported positive contributions, albeit smaller in comparison. However, some ETFs, such as Ark Invest’s ARKB and Grayscale’s GBTC, experienced net outflows during this period. Overall, these sustained positive net inflows underscore continued strong interest and confidence in Bitcoin as an asset class among investors.

This surge represents a significant endorsement of Bitcoin as an asset class. This week, Bitcoin, the world’s largest first-ever crypto asset, achieved a groundbreaking milestone by surpassing the collective market capitalization of the world’s three largest banks. This historic feat, revealed by recently compiled data from Coinpedia Markets, shows Bitcoin’s market cap has surged to an astounding $1.37 trillion, exceeding the total market value of JPMorgan Chase, Bank of America, and the Industrial and Commercial Bank of China.

The Shib Daily has reached out to both CME Group and EBS for their comments on this report. We are committed to providing our readers with the most accurate and up-to-date information, and will update this article as soon as any responses are received.

Disclaimer: Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice.
The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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