CME to Launch Crypto Ratio Futures as Cboe Eyes Fidelity’s Spot BTC ETF

Chicago Mercantile Exchange (CME), one of the world’s largest derivatives marketplaces, plans to launch crypto Ether (ETH)/Bitcoin (BTC) ratio futures on July 31, 2023. This is even as Cboe BZX Exchange, one of four equities exchanges operated by Cboe Global Markets, approached the US securities watchdog on Thursday, requesting permission to list the Wise Origin Bitcoin Trust, according to Reuters.

Top asset manager Fidelity filed the Trust in March 2021 with the Securities and Exchange Commission (SEC), seeking to create an exchange-traded fund (ETC) that tracked the price performance of BTC, Finance Magnates reported. However, the SEC rejected the financial services giant's proposal for the spot BTC ETF in January last year.

The ‘BlackRock’ Fever

Cboe’s application to list Fidelity’s fund comes on the heels of resurging interest in cryptocurrency exposure among institutional investors. Since the proposal by BlackRock, a fund management firm to the SEC two weeks ago, ARK Invest, Fidelity, Invesco and WisdomTree have also sought similar approval.

Surprisingly, the wave of new applications trails the SEC’s recent crackdown on ‘unregistered’ crypto exchanges in the United States, including Binance and Coinbase. Experts believe that traditional investors are trying to secure permission for their spot BTC ETF applications having seen Blackrock's success after being previously turned down.

CME Group Expands Crypto Futures Offering

Meanwhile, CME’s planned crypto ratio futures target BTC and ETH, the two largest cryptocurrencies by market capitalization. Crypto ratio futures are a type of derivative contract that enables traders to bet on the relative price movements of two digital assets. These contracts are traded on decentralized exchanges such as Binance Futures.

CME noted in the statement that its launch of the contract next month is dependent on a regulatory review. It added that the crypto ratio futures will follow the same listing cycle as its BTC/ETH futures contracts.

“The Ether/Bitcoin Ratio futures will be cash-settled to the value of CME Group Ether futures final settlement price, divided by the corresponding CME Group Bitcoin futures final settlement price,” the derivatives exchange further elaborated.

Giovanni Vicioso, the Global Head of Cryptocurrency Products at the CME Group, believes that the ratio futures contracts will give investors the ability to “capture ether and bitcoin exposure in a single trade without needing to take a directional view.”

“This new contract will help create opportunities for a broad array of clients looking to hedge positions or execute other trading strategies, all in an efficient, cost-effective manner,” Vicioso added.

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