Cboe Receives CFTC Approval to Launch Leveraged Crypto Derivatives

Cboe Receives CFTC Approval to Launch Leveraged Crypto Derivatives – Cboe Digital, a cryptocurrency exchange and clearinghouse, has gained approval from the U.S. derivatives markets regulator to introduce margined bitcoin and ether futures contracts. This regulatory nod enables Cboe’s clients to engage in cryptocurrency futures trading with a reduced requirement for upfront collateral.

Cboe Secures Regulatory Approval for Margin Trading of Crypto Futures

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Cboe Global Markets, a U.S. exchange operator, announced on Monday that it has received regulatory authorization from the Commodity Futures Trading Commission (CFTC) in the United States. This approval grants Cboe the ability to offer leveraged derivative products on its Cboe Digital trading platform. As per statements reported by Reuters and Bloomberg, this authorization will allow Cboe to launch physically and financially settled bitcoin and ether margined futures contracts on its Cboe Digital platform in the latter half of the year.

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Previously, Cboe could only provide fully collateralized trading for crypto futures, where users were required to provide the full contract amount before engaging in trading. The introduction of margined trading will enable users to trade with a reduced capital requirement. “Derivatives are a time-tested and valuable tool that enable investors to gain market exposure and manage their risk,” President of Cboe Digital John Palmer stated. 

He also pointed out that physical settlement of digital assets will allow traditional financial firms to access bitcoin or ether futures without intermediaries taking custody and emphasized: “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 Digital, a regulated cryptocurrency exchange and clearinghouse platform, stands out as the sole U.S.-registered exchange that permits spot and derivatives trading of various digital assets, including bitcoin (BTC), bitcoin cash (BCH), litecoin (LTC), and the stablecoin USDC. In May 2022, Cboe completed its acquisition of Erisx, a cryptocurrency exchange that was subsequently rebranded as Cboe Digital. 

Later in November, the Chicago-based exchange operator disclosed that several companies, including Galaxy Digital and Robinhood Markets, had acquired minority equity stakes in Cboe Digital. The platform primarily serves professional and institutional market participants. This regulatory approval arrives during a period of heightened regulatory scrutiny within the cryptocurrency sector, prompted by negative developments like the collapse of leading exchange FTX

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FTX had also pursued CFTC approval for trading crypto derivatives prior to filing for bankruptcy protection. CFTC Commissioner Christy Goldsmith Romero commended Cboe Digital in a statement for not following the path taken by others in the industry, which involved attempting to transfer unregulated business models or market structures into the regulated environment.

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