Cboe Digital, a prominent options exchange in the United States, has obtained regulatory approval to introduce margined futures contracts for Bitcoin (BTC) and Ether (ETH) on its platform. Since December 2017, Cboe has been offering crypto futures contracts; however, margin trading was previously unavailable to users. This recent approval opens up new possibilities for traders, enabling them to engage in Bitcoin and Ether futures trading with a fraction of the initial upfront investment.
This regulatory nod is not only significant for Cboe but also beneficial for traditional financial institutions seeking access to crypto futures without the need for intermediaries to handle custody. Cboe Digital President John Palmer emphasized the advantages of having a spot market, stating that they wanted to avoid compelling participants to handle or store the physical asset.
Today @CFTCcgr released a statement regarding Cboe Clear Digital, LLC’s expanded clearing of digital asset futures. Read it here: https://t.co/lyD3uv0rP3
— CFTC (@CFTC) June 5, 2023
The timing of this approval is crucial, considering the ongoing regulatory uncertainty faced by U.S. market participants due to the U.S. Securities Exchange Commission’s actions. CFTC Commissioner Christy Goldsmith Romero commended Cboe’s approach and urged other crypto firms to follow suit, emphasizing the importance of aligning with the existing traditional market structure.
Today the CFTC approved Cboe Clear Digital, LLC to clear margined digital asset futures. Learn more: https://t.co/tWLd2F7E2h
— CFTC (@CFTC) June 5, 2023
Goldsmith Romero explained that Cboe’s success contrasts sharply with the application submitted by FTX, which faced bankruptcy. Cboe’s approval was granted after the regulator requested additional risk-mitigation measures to address the heightened risks associated with the digital asset market. One notable requirement was the implementation of stricter cybersecurity practices.
Gabor Gurbacs, a strategy adviser for Tether and VanEck, shared his optimism about the approval on Twitter, noting that it would likely be perceived as a victory for institutional investors. Galaxy Digital CEO Mike Novogratz believes that institutional investors have played a role in the recent sluggish buying activity.
I worked with the OCC back in the days to get a margined model approved… the CFTC was waiting to see how the CME contracts end up functioning. Obviously they are working well… so looks like approvals are back on the table.
— Gabor Gurbacs (@gaborgurbacs) June 6, 2023
Cointelegraph reached out to Cboe for a comment on this development; however, an immediate response was not received.