The CFTC has officially given Cboe Digital the approval it needs to offer margined futures contracts trading to clients.
Cboe Global Markets’ digital asset exchange has received approval to allow users to trade crypto futures contracts. Customers of the Cboe Digital platform will now trade Ether (ETH) and Bitcoin (BTC) futures contracts later this year following the CFTC’s approval for an amended order of registration.
The Commodity Futures Trading Commission (CFTC) gave Cboe Digital approval to financially and physically settle margin contracts from the second half of the year. The futures trading approval is pivotal for Cboe even though the company has allowed crypto futures contracts trading for more than five years. However, although this has been available for a while, users could not conduct margined trades.
In an official press release yesterday, the CFTC said:
“The amended order permits Cboe [Digital] to provide clearing services for digital asset futures on a margined basis for futures commission merchants, in addition to the fully collateralized futures and fully collateralized swaps previously authorized.”
Before the approval, Cboe offered fully collateralized crypto futures that require the full value of a contract before the trade. Margined trading differs as users can begin trading without 100% of the funds. In addition, the new approval will allow Cboe support traditional firms physically settling their assets without requiring custody services from intermediaries.
Cboe will settle the assets and support margin trading as it is the only exchange registered in the US that offers spot and derivatives trading. Supported assets include Bitcoin, Ether, Bitcoin Cash, USDC, and Litecoin.
Speaking to Bloomberg on traditional firms’ direct access without intermediary custody, Cboe Digital President John Palmer noted:
“That’s where the concept of us also having a spot market has advantages. We didn’t want to have to force participants to custody or touch the physical asset.”
Cboe Still In Race for Spot Bitcoin ETF Approval
Last month, Cboe submitted an application to the Securities Exchange Commission (SEC) for a spot Bitcoin exchange-traded fund (ETF). The submission is the Cboe’s third attempt at getting the SEC to approve the ETF, with the previous two rejected. In January, the SEC denied the Cboe’s second attempt stating that the ETF had inadequate measures to protect investors from fraud and manipulation.
The SEC has rejected all applications for spot BTC ETFs, including submissions from Fidelity, the New York Digital Investment Group (NYDIG), and Grayscale. In October, the SEC also rejected a proposal from WisdomTree. Again, the commission said there wasn’t enough investor protection.
The SEC’s stubborn stance against spot Bitcoin ETFs is unjustified to many. Hopefuls believe that the commission is being deliberately difficult about its refusal to approve these ETFs. Last year, Grayscale instituted legal action against the SEC and gathered support from Coinbase. In October, the exchange filed an amicus brief to support Grayscale’s lawsuit against the SEC after the rejection. The SEC had raised the same concerns, citing problems with market manipulation. Nevertheless, Grayscale said the disapproval was “arbitrary, capricious, and discriminatory”.
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