Crypto Derivatives Trading Platforms See Surge With Over $40B

Key Points:

• Crypto derivatives trading now dominates 71% of digital asset trading volume, with open interest exceeding $40 billion.
• New players, including D2X, One Trading, and Kraken, are entering the crypto derivatives market.

According to the Financial Times, crypto exchanges increasingly are getting into the derivatives market in hope of luring investors wary of the wild sector by touting regulatory compliance and the promise of high-leverage returns.

Read more: BlackRock Promotes BUIDL Token as Collateral for Derivatives

Crypto Derivatives Trading Volume Dominates as Market Expands

In general, derivatives now make up 71% of total cryptocurrency trading volume, and interest in this area continues to rise, according to data from CCData. As recently as this month, open interest in crypto derivatives trading jumped above $40 billion, in a show of its supremacy in digital asset trading.

CME Group has led this trend, setting records in trading volume and open positions this year. To further accommodate institutional clients, last Friday, CME launched a Bitcoin futures contract pegged to New York’s trading hours, designed to satisfy particular investor demand.

Meanwhile, a new crop of entrants is going live in the crypto derivatives trading space. Dutch platform D2X says it will go live next month, while London-based operators One Trading and GFO-X are on track to join early next year. Kraken, one of the largest cryptocurrency exchanges, has also entered the space, setting up a derivatives trading venue in Bermuda this month, which pits it directly against the likes of CME, Binance, and Bybit.

Compliant On-chain Derivatives Appeal to Risk-averse Investors

The collapse of top crypto lending businesses, such as FTX, has shifted investors’ focus to the crypto derivatives trading market. According to Jason Urban, Global Trading Director at Galaxy Digital, unsecured lending is all but gone from the crypto ecosystem. Investors are looking at derivatives as another way to attain leverage without undergoing the risks of an unsecured loan.

Many investors have abandoned trading tokens directly as the U.S. Securities and Exchange Commission ramped up scrutiny and unleashed lawsuits against firms that issued unregistered securities.

At the same time, the SEC’s recent approval of options on Bitcoin ETFs could hint that its approach to regulation might be a little more nuanced than expected. With this, new crypto derivatives trading platforms are taking advantage of the opportunity for an increasingly regulated environment.