Cboe’s Crypto Unit Receives CFTC Approval for Margined Digital Asset Futures

The crypto unit of Cboe Global Markets, Cboe Digital, has received approval by the Commodities and Futures Commission (CFTC) to start offering margined bitcoin (BTC) and ether (ETH) futures contracts, the company announced Tuesday.

Traders on Cboe Digital will be able to trade physically and financially settled bitcoin and ether contracts as soon as the second half of 2023, said a company statement. Prior to the approval, the platform only allowed the trading of fully collateralized crypto futures.

“We think this is a win for participants [who are looking to gain access to] trusted, regulated [US derivatives markets],” Cboe Digital President John Palmer said.

Margined contracts allow traders to only deposit part of the total position that is bought or sold, which is different from fully collateralized contracts where the whole amount has to be paid upfront. Palmer said margin trading is a “big driver” of global derivatives use.

Besides Cboe, only one other CFTC-regulated exchange in the U.S., CME Group, offers margin to institutional traders trading cryptocurrency futures.

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“I have been vocal about the benefits of bringing appropriate crypto activities into the regulated space in order to protect customers, but in a way that supports oversight, accountability, transparency, and risk management,” CFTC Commissioner Christy Goldsmith Romero said in a statement.

Cboe has been “operating within the parameters of the traditional futures market structure and regulatory framework,” said Romero. “It has constructively engaged with the staff and my office to address concerns related to risk, and implement risk-mitigating measures.”

Cboe’s Palmer added that the exchange has “no plans in sight as of now” to add additional cryptocurrency products beyond bitcoin and ether.

“We're always taking a very prudent approach to products that we list in the spot and derivatives markets," he said.

UPDATE (June 7, 2023, 17:26 UTC): Changes name in first paragraph from Chicago Board Options Exchange to Cboe Digital Markets.