CME: the Chicago Stock Exchange could launch Bitcoin trading

Today, an article was published on the Financial Times claiming that the Chicago CME Stock Exchange is planning to launch Bitcoin trading. 

The source of the leak is anonymous, but it would be three people who have direct knowledge of the ongoing talks between CME and the Swiss EBS.

The CME has refused to officially comment on this rumor, which means they have not denied it. 

The project, however, has not yet been finalized. 

CME and Bitcoin trading on the Chicago Stock Exchange

CME Group is the largest futures exchange in the world.

It was actually founded in 1898 as the Chicago Mercantile Exchange, and in 2002 it went public as well. 

In 2007 CME merged with rival Chicago Board of Trade, in an $8 billion merger that created what was at the time the single largest exchange in the world. 

In 2017 it was one of the very first major Western exchanges to list futures on Bitcoin.

So the relationship between CME and Bitcoin has been long-standing, so much so that the first crypto ETFs in the USA were created years ago on the BTC futures listed on CME. 

Now the idea seems to be to combine trading futures on BTC with direct trading of Bitcoin. 

This addition would allow investors to more easily perform basic operations, such as borrowing money to sell futures while simultaneously buying the underlying asset to extract gains from the small gap between the two.

It is worth noting that thanks to the boom of Bitcoin on traditional US stock exchanges, after the listing of the new Bitcoin spot ETFs, according to what the Financial Times reveals, CME has even surpassed Binance becoming the largest market in the world for Bitcoin futures.

Currently, there are as many as 26,000 open positions on BTC futures, with a total value of around 8.5 billion dollars. This is more than double the amount from a year ago.

The partnership with EBS 

The rumors collected by the Financial Times claim that BTC spot trading on the CME is actually managed through the Swiss currency trading venue EBS, thanks to the extensive and clear Swiss regulations governing the trading and storage of cryptocurrencies.

It should be remembered that in the USA there is still no crypto regulation, while Switzerland was one of the first countries in the world to adopt one, several years ago. 

Probably from this point of view it is the most advanced jurisdiction in the world, thanks above all to the fact of having several years of experience in this field.

For example, CBOE Global Markets, the rival of CME in Chicago, declared last month that it intends to close its operations in the spot market, precisely due to the lack of clear regulation in this regard in the USA.

Thanks to the partnership with the Swiss EBS, CME could solve this problem at the source, effectively transferring the physical activity of spot trading on Bitcoin to Switzerland. 

CME: The success of the Bitcoin trading initiative on the Chicago Stock Exchange

Actually, it seems a bit limiting that on traditional exchanges you can trade derivatives on Bitcoin but not BTC.

Moreover, after the resounding success of Bitcoin spot ETFs on Nasdaq or NYSE, it really makes you wonder why direct BTC trading cannot also be successful here.

The main problem seems to be regulatory, but the CME should have brilliantly solved it by relying on a company that operates in a jurisdiction with clear and well-tested rules for a long time. 

However, there are doubts about the success of this operation, because this type of spot trading on traditional stock exchanges could prove to be less efficient than trading on crypto exchanges. 

For example, Deutsche Börse has opened its own spot digital asset market this year, but for now it doesn’t seem to have achieved great success. 

However, the introduction of Bitcoin spot trading on the CME would bring with it another important advantage, namely the clear and blatant demonstration that major regulated exchanges are becoming increasingly comfortable with the infrastructure for the exchange of digital assets.

In light of this, the Financial Times hypothesizes that in the future, traditional stock exchanges could, for example, start accepting cryptocurrencies as collateral or hosting tokenized markets. 

Bitcoin and traditional financial markets

Moreover, this year has not only been the year in which Bitcoin landed on US stock exchanges thanks to a direct derivative. 

It was also the year in which several traditional financial institutions began to take a position on the price of BTC, using ETFs, although still to a very limited extent. 

There have been quite a few financial institutions that in their latest quarterly reports have revealed that they have bought shares of Bitcoin spot ETFs, even though the declared amounts are really minimal compared to their usual habits. 

Thanks to these Bitcoin ETFs, Bitcoin has not only landed on traditional financial markets, but has also managed to attract some interest from institutions that until a few years ago would never have dared to approach BTC. 

At this point, the CME’s move could also be the first of a long series.