Cboe Digital Dominates Crypto Futures Margin Trades With Regulatory Approval

Key Points:

• Cboe Digital gets approval to offer margined futures contracts for Bitcoin and Ether in the United States commodities market.
• With this approval, users will be able to trade BTC and ETH futures with a fraction of what they initially had to put upfront.
• The approval is seen as a positive step for traditional financial firms to access crypto futures without intermediaries having to take custody.

Cboe Digital, a major options exchange in the United States, has been granted approval by the United States commodities regulator to offer margined futures contracts for Bitcoin (BTC) and Ether (ETH).

This is a significant development for Cboe, which has been offering crypto futures contracts since December 2017, but has not been able to provide margin trades to users. With this new approval, users will be able to trade Bitcoin (BTC) and Ether (ETH) futures with a smaller initial investment.

This development is particularly noteworthy for traditional financial firms, as it will enable them to access crypto futures without the need for intermediaries to take custody. Cboe Digital President John Palmer has highlighted the advantages of having a spot market, saying “We didn’t want to have to force participants to custody or touch the physical asset.”

This approval has been received positively by the industry, especially at a time when the U.S. market is grappling with regulatory uncertainty from the U.S. Securities Exchange Commission. CFTC Commissioner Christy Goldsmith Romero has praised Cboe’s approach, urging other crypto firms to follow its lead and fit within the existing traditional markets structure.

In contrast, the application the CFTC reviewed from FTX prior to its bankruptcy did not meet the regulator’s requirements. Commissioner Goldsmith Romero explained that Cboe’s approval came after the regulator requested additional measures for “critical risk-mitigation” to account for several “heightened risks” related to the digital asset market, including stricter cybersecurity practices.

This development is a significant step forward for Cboe and traditional financial firms seeking to access crypto futures without intermediaries having to take custody.

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