CME Gearing Up for Battle with Binance and Coinbase: Spot Bitcoin Trading in the Works

By Lars Weer Last updated May 16, 2024

Markus Thielen, founder of 10x Research, suggested that the advent of spot bitcoin trading on CME could result in a decline in business for existing crypto exchanges.
CME holds a prominent position among bitcoin futures exchanges, ranked by open interest.

The Chicago Mercantile Exchange (CME), a leading figure in the futures market, is set to introduce spot bitcoin trading due to increasing demand from market players, according to a Financial Times report from Thursday.

Currently, CME dominates the bitcoin futures market in terms of open interest, whereas the spot market is led by the unregulated offshore exchange, Binance.

The report, citing sources familiar with the matter, indicated that CME has engaged in discussions with traders eager to trade bitcoin on a regulated platform.

It’s anticipated that CME’s spot trading operations might be facilitated through the EBS trading platform in Switzerland.

CME has declined to provide comments on the report.

By introducing a spot market, CME aims to enhance its suite of services, which already includes standard and micro bitcoin futures contracts—an asset class widely viewed as a reflection of institutional involvement. This development would further position CME as a major player in the crypto market. Meanwhile, Binance maintains its dominance in the spot market sector.

The introduction of a spot market by CME would allow traders to devise intricate strategies encompassing both spot and futures markets within a single regulated exchange. Notably, carry traders often engage in arbitrage by shorting CME futures while taking long positions in spot markets or spot ETFs elsewhere.

Markus Thielen of 10x Research remarked, “The emergence of a bitcoin spot market at CME, a colossal entity in derivatives, could potentially divert business from current crypto exchanges. This trend is largely driven by institutional investors who favor regulated environments for trading.”

UPDATE (May 16, 07:20 UTC): Includes additional details.