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The Chicago Mercantile Exchange (CME) Ventures into Spot Bitcoin Trading
The Chicago Mercantile Exchange (CME) is set to pioneer the introduction of spot Bitcoin trading to cater to the escalating demand for the dominant digital asset on Wall Street. As reported by the Financial Times, CME, recognized as the world’s largest futures BTC trading platform, is currently engaging with cryptocurrency traders to establish a regulated spot BTC trading marketplace. This move comes as a response to the surging interest in digital assets among traditional financial institutions.
Regulated Marketplace for Spot BTC Trading
The anticipated spot trading platform on CME is projected to function through EBS, a renowned Swiss currency trading platform known for its stringent regulations concerning cryptocurrency asset trading. The initiation of spot trading for BTC on CME holds the promise of enabling traders to engage in basis trades, a trading tactic designed to capitalize on the marginal price differentials between futures contracts and the underlying spot BTC.
Wall Street’s Ongoing Interest in Crypto
Despite the specifics of the trading platform still being in the process of finalization, CME’s impending entry serves as a testament to the sustained fascination of major Wall Street players with the crypto sphere. This development follows the SEC’s green light for Spot Bitcoin exchange-traded funds (ETFs) earlier in January, marking a significant stride towards the wider acceptance and integration of digital assets into traditional financial markets.
Major Financial Institutions’ Crypto Exposure
Recent SEC filings from notable Wall Street financial entities such as Morgan Stanley and Millennium Management disclose that many of these firms possess exposure to crypto-related investment products. As highlighted by Vetle Lunde, a senior analyst at K33 Research, institutional interest in U.S. spot ETFs registered notable growth as of Q1. Professional investors held exposure amounting to $11.06bn by the end of the quarter, reflecting 18.7% of the BTC ETF AUM.
“According to 13F reporting, 937 professional firms were invested in U.S. spot ETFs as of March 31. In comparison, gold ETFs had 95 professional firms invested in their first quarter (Bitwise). Retail owns a majority of the float. Professional investors held exposure of $11.06bn by the end of Q1, representing 18.7% of the BTC ETF AUM.”
Competition in the Crypto Trading Landscape
With CME’s foray into spot Bitcoin trading, a significant rivalry is anticipated for Binance, currently the top cryptocurrency exchange in terms of trading volume. Binance, which was the leading Bitcoin futures platform globally prior to CME’s heightened activity, is presently facing regulatory scrutiny across various jurisdictions. Notably, Binance currently accounts for 56% of BTC spot trading, closely trailed by Coinbase and Bybit at 10.1% and 10.5%, respectively.
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