June 12, 2024

Image for article titled Spot Bitcoin trading will be available on the Chicago Mercantile Exchange soon

Illustration: Benoit Tessier (Reuters)

Chicago Mercantile Exchange (CME) Group, the world’s largest futures exchange, will soon offer spot Bitcoin trading as crypto is becoming mainstream and demand is surging, reports the Financial Times.

CME is the world’s largest futures Bitcoin trading platform and has been in discussions with cryptocurrency traders to establish a regulated marketplace for spot Bitcoin trading. According to the report, EBS, a Swiss-based currency trading platform known for its strict crypto asset trading regulations, is expected to run the platform.

Spot trading crypto involves buying or selling at the current market price, as opposed to futures which allows traders to bet on the up or down movement of cryptocurrency prices without actually owning them.

While the volatile nature of cryptocurrency prices makes things tricky, spot trading poses a relatively low level of risk because traders are only exposed to their crypto’s price movements. Returns on spot trades, however, tend not to be as high as those from futures trading.

Spot trading for Bitcoin on CME would enable traders to engage in basis trades, a strategy designed to profit from the small price differences between futures contracts and the underlying spot Bitcoin. The exchange has not commented in detail about the offer, but the move highlights how crypto has become more mainstream and how big financial players are taking an interest in it.

The move follows the approval of the Securities and Exchange Commission of spot Bitcoin ETFs in January, which allowed giant financial institutions, such as BlackRock, Fidelity, and others, to jump into the new era of digital assets.

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