CME Groups is not ready to offer futures on cryptocurrencies except bitcoin in the near-term. This is an opposite stance taken by its competitor, Cboe Global Markets Inc., which is not averse to the idea, according to Bloomberg. The stand taken by the biggest exchange comes in the wake of policymakers expressing concerns on the growing demand for digital currency as South Korea unearthed significant money laundering transaction. The move also assumes significance as different nations are also planning to come out with fresh regulations to tighten screws on digital currencies trading.
Markets Are Polarizing
Incidentally, only in December, the CME Group introduced futures on Bitcoin as a follow up to Cboe entry into cryptocurrency market. The world’s biggest exchange CEO, Terry Duffy, clarified that the virtual currencies markets are polarizing. He also felt that it was tough to predict the market futures. As a result, he preferred the exchange to go slow on allowing futures on other digital currencies.
The CEO was categorical about the reputation of the exchange and that he would not do anything that could lead to possible damaging to it. He told Bloomberg that “We need to learn more.” He added further, “To say that you should just automatically go ahead and list others I think is a little irresponsible right now.” On the other hand, Cboe is seen as aggressive to capture market share irrespective of what the global policymakers think.
Liquidity and the Notional Size
On January 17, Cboe president and CEO, Chris Concannon, wanted to look at the complete digital currency segment and take a stand on what every product has in liquidity apart from the notional size. This would enable to take a decision on the derivative listing in the exchange. He was also cautious about one thing. He would not launch any other digital currency futures until its derivatives exchange is ready to use the software for trading. The company acquired the software from Bats Global Markets last year and the upgrade is slated to happen later this month.
Incidentally, Cboe has been witnessing a lot of trading activities of late. That is because traders use the exchange’s products more. This was quite evident when the exchange saw approximately 7.5 times more volume in the last five days or so. This suggested the company’s keenness to extend its popularity among the investing community. In any case, for the accounting purposes, the fact was that CME’s contract represented five Bitcoins compared to just one at Cboe.
Bitcoin Remains the Top Grab
One of the reasons that CME Group preferred to restrict the exposure to other digital currencies is that Bitcoin continued to remain the bulk of the hype. Therefore, the exchange preferred to remain cautious on other virtual currencies as there are as much as 1,500 other cryptocurrencies listed on Coinmarketcap.com.
While Bitcoin remains the biggest in terms of market capitalization, the second and third positions are occupied by Ethereum and Ripple. These two virtual currencies enjoy a market cap of $100 billion and $38 billion respectively. Bitcoin leads the table with $155 billion market cap.