CME gears up to launch spot Bitcoin trading, challenging Binance’s dominance

The Chicago Mercantile Exchange (CME) is gearing up to introduce spot Bitcoin trading, responding to the growing demand for the leading digital asset on Wall Street, the Financial Times reported on May 16.

CME is the world’s largest futures BTC trading medium and has been in talks with crypto traders to establish a regulated marketplace for spot BTC trading. The platform is anticipated to operate through EBS, a Swiss currency trading platform known for its strict regulations on crypto asset trading.

The introduction of spot trading for BTC on CME would allow traders to participate in basis trades. This trading strategy aims to profit from the small price differences present on the futures contracts and the underlying spot BTC.

While details of the trading platform are yet to be finalized, CME’s potential entry emphasizes the continued interest of major Wall Street players in the crypto sector.

This development follows the SEC’s approval of Spot Bitcoin exchange-traded funds (ETFs) in January, signaling the increasing acceptance and integration of digital assets into traditional financial markets.

Recent SEC filings from various Wall Street financial institutions, such as Morgan Stanley and Millennium Management, reveal that many of these firms have exposure to crypto-related investment products. Vetle Lunde, a senior analyst at K33 Research said.

“According to 13F reporting, 937 professional firms were invested in U.S. spot ETFs as of March 31. In comparison, gold ETFs had 95 professional firms invested in their first quarter (Bitwise). Retail owns a majority of the float. Professional investors held exposure of $11.06bn by the end of Q1, representing 18.7% of the BTC ETF AUM.”

Meanwhile, CME’s entry into spot Bitcoin trading could pose significant competition for Binance, the largest crypto exchange by trading volume, which currently faces regulatory scrutiny worldwide. Binance had been the top Bitcoin futures platform globally prior to CME’s surge in activity.

According to Kaiko data, Binance accounts for 56% of BTC spot trading, followed by Coinbase and Bybit at 10.1% and 10.5%, respectively.

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