Updated: November 12, 2024
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The Chicago Mercantile Exchange (CME), the world’s largest futures Bitcoin (BTC) trading platform, is preparing to introduce spot BTC trading in response to the increasing demand from Wall Street investors.
According to an initial report from the Financial Times, CME has been in discussions with crypto traders to establish a regulated marketplace for spot BTC trading. This platform is expected to operate through EBS, a Swiss currency trading platform known for its strict regulations on crypto asset trading.
The introduction of spot BTC trading on CME would enable traders to engage in basis trades, a strategy that aims to profit from the small price discrepancies between futures contracts and the underlying spot BTC. While the specifics of the trading platform are yet to be finalized, CME’s potential entry into the spot BTC market underscores the sustained interest of major Wall Street players in the crypto sector.
This development comes on the heels of the US Securities and Exchange Commission’s (SEC) approval of spot Bitcoin exchange-traded funds (ETFs) in January, signaling the growing acceptance and integration of digital assets into traditional financial markets. Recent SEC filings from various Wall Street financial institutions, such as Morgan Stanley and Millennium Management, reveal that many of these firms have exposure to crypto-related investment products.
Vetle Lunde, a senior analyst at K33 Research, noted that as of March 31, 937 professional firms were invested in U.S. spot ETFs, compared to just 95 professional firms invested in gold ETFs during their first quarter. Retail investors own a majority of the float, with professional investors holding exposure of $11.06 billion. This ratio represents 18.7% of the BTC ETF assets under management (AUM).
CME’s entry into spot Bitcoin trading could present significant competition for Binance, the largest crypto exchange by trading volume, which currently faces regulatory scrutiny worldwide.
Prior to CME’s surge in activity, Binance had been the top Bitcoin futures platform globally. Aggregated data from Kaiko Research indicates that between top centralized exchanges, Binance accounts for 56% of BTC spot trading, followed by Coinbase and Bybit at 10.1% and 10.5%, respectively.
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