- Chicago Mercantile Exchange (CME) plans to launch spot bitcoin trading to meet growing demand from market participants.
- CME is already the top bitcoin futures exchange by open interest, while the offshore, non-regulated Binance dominates the spot market.
- The potential debut of a bitcoin spot market on the regulated CME platform could pose a challenge to existing crypto exchanges like Binance and Coinbase.
The Chicago Mercantile Exchange (CME) is planning to offer spot bitcoin trading to clients as demand grows for this product among market participants, according to a Financial Times report published on Thursday.
CME Already Leads in Bitcoin Futures
CME is already the top bitcoin futures exchange by open interest, while offshore, non-regulated Binance dominates the spot market.
The exchange has discussed with traders who want to trade bitcoin on a regulated marketplace, the FT reported, citing people with direct knowledge of the talks.
CME’s spot trading business could be operated through the EBS currency trading venue in Switzerland, the report added.
The exchange declined to comment on the report.
New Spot Market Could Attract More Traders
The spot market will complement CME’s existing standard and micro futures contracts, which are widely considered a proxy for institutional activity. This could help CME become even more dominant in the crypto market.
CME is already the top bitcoin futures exchange by open interest, while offshore, non-regulated Binance leads in spot trading. Coinbase, the only U.S. traded crypto exchange, is third by daily volume.
The availability of a spot market means traders can now execute complex, multi-leg strategies involving both spot and futures in one regulated venue. Carry traders are known to short CME futures against long spot positions on other exchanges or in spot ETFs.
Exchanges May Lose Business
Crypto exchanges might lose some business if CME launches bitcoin spot trading, according to Markus Thielen, founder of 10x Research. He said the current crypto bull run is driven particularly by institutions that prefer regulated trading avenues.
Conclusion
The potential launch of a bitcoin spot market on derivatives giant CME could shift more institutional trading volume to regulated exchanges and away from offshore platforms. CME already leads in bitcoin futures open interest, so a spot offering would allow even more complex trading strategies on its venue.
