CME and Cboe to Launch Crypto Products Next Year

Along with institutional investors, trading exchanges are also coming for cryptocurrencies. Wednesday turned out to be a bonanza day for crypto after two major exchanges announced their plans to launch products tailored for crypto next year.

Cboe Global Markets, Inc. (CBOE) said it will roll out data and trading products aimed at crypto investors starting from the second quarter of next year. Separately, CME Group Inc.'s (CME) Chicago Mercantile Exchange announced its plans to debut futures contracts in Ether (ETHUSD), the native cryptocurrency for the Ethereum blockchain. CME already has Bitcoin (BTCUSD) futures contracts trading services on its platform.

The announcements come at the cusp of entry by institutional investors into the cryptocurrency ecosystem. The planned products are meant to tap into the growing demand for the new asset class. 

Key Takeaways

  • Cboe and CME are launching new crypto products next year aimed at meeting demand for crypto investing by institutional investors.
  • Cboe plans to launch trading and indexing products in three phases next year.
  • CME will launch trading in Ether futures contracts on Feb. 8, 2021.

Will Second Time Be the Charm for Cboe?

Cboe is no stranger to Bitcoin. The world's largest options trading exchange was the first regulated entity in the United States to launch Bitcoin futures contracts trading in December 2017. But it discontinued the service in March 2019, citing low trading volumes.

The Chicago-based institution is taking a more studied approach to Bitcoin this time around. It has tied up with New York crypto data firm CoinRoutes to develop a product portfolio that provides information about crypto pricing and trades. The effort is aimed at bringing transparency to the crypto ecosystem, according to a press release. (The exchange had partnered with Gemini, a cryptocurrency exchange run by the Winklevoss brothers, for Bitcoin pricing data during its last outing with crypto).

Cboe is targeting institutional investors interested in crypto as clients for its service. The exchange is developing its information products to be "of service to (traditional clients like institutional investors) … as they embark on that endeavor," Catherine Clay, head of information solutions at Cboe Global Markets, told online publication Coindesk.

While the specifics of Cboe's products are not available yet, Clay said that they could include cryptocurrency indexes, historical data, and tick data. Cboe will roll out its products in three phases, starting with product creation and launch in the first quarter of next year and product distribution during the second quarter.

CME Expands Its Crypto Product Portfolio 

Meanwhile, Cboe competitor CME is boosting its crypto futures portfolio with the launch of Ether futures contracts on Feb. 8 next year. CME already offers Bitcoin futures contract trading on its platform. Each Ether futures contract will consist of 50 ETH and will use the CME CF Ether-Dollar Reference Rate from CF Benchmarks, a crypto data firm that is regulated by the United Kingdom's Financial Conduct Authority (FCA). The monthly contracts will be cash-settled.

"Based on increasing client demand and robust growth in our Bitcoin futures and options markets, we believe the addition of Ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency," Tim McCourt, CME Group's global head of equity index and alternative investment products, stated in a press release to online publication The Block.