The Chicago Mercantile Exchange (CME) is reportedly planning to launch Bitcoin trading to cater to the increasing demand for Bitcoin among Wall Street fund managers. According to the Financial Times, the CME has been in discussions with crypto traders to establish a regulated marketplace for buying and selling Bitcoin.
While the plans are still in the works, the potential Bitcoin trading initiative by CME signifies the growing interest of Wall Street giants in the crypto space. This move follows the approval by the SEC in January for Spot Bitcoin exchange-traded funds.
The CME is looking to offer its spot Bitcoin trading services through EBS, a Swiss currency trading platform known for its strict regulations on crypto asset trading and storage. However, a CME Group spokesperson declined to comment on the matter.
If the CME introduces spot Bitcoin trading alongside its existing Bitcoin futures offerings, it could pave the way for investors to engage in ‘basis trades.’ Basis trades involve selling futures contracts while simultaneously buying the underlying Bitcoin to profit from the price difference between them. This strategy is popular in the US Treasury market and could find traction on CME platforms.
CME has emerged as one of the leading Bitcoin futures markets globally, surpassing Binance. This growth reflects the rising interest of institutional investors in capitalizing on Bitcoin’s volatility. A study by Bitwise Asset Management in 2020 revealed that the CME Bitcoin futures market consistently outperforms the spot market.
In a bid to enhance transparency and trust in cryptocurrency trading, 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.