Cboe Global Markets has unveiled plans to restructure its digital assets trading operations, which includes discontinuing its digital spot market. The reorganization entails integrating digital asset derivative trading into its Global Derivatives and Clearing businesses.
The closure of the Cboe Digital Spot Market is scheduled for the third quarter of 2024. Additionally, cash-settled Bitcoin and Ether futures contracts will transition from the Cboe Digital Exchange to the Cboe Futures Exchange in the first half of 2025, subject to regulatory approval and corporate endorsements.
Cboe Clear Digital, the clearing arm of Cboe Digital, will be consolidated with Cboe Clear Europe under the unified leadership of Cboe Clear Europe president Vikesh Patel. This move aligns with Cboe’s strategic review, considering the regulatory ambiguity in the digital space and aligning with its longer-term strategy.
The potential classification of ETH as a security may have influenced the decision to reorganize. The closure of the digital spot trading arm is projected to yield significant savings for Cboe, with anticipated annual savings ranging from $11 million to $15 million.
Despite the restructuring, Cboe remains optimistic about the demand for exchange-traded digital asset derivatives. David Howson, global president of Cboe Global Markets, anticipates continued demand for such derivatives to manage crypto exposures, hedge risks, and improve capital and operational efficiencies.
Cboe’s expansion into the digital asset space was bolstered by its acquisition of ErisX in May 2022, which operated spot and derivatives markets along with a clearing platform. However, the acquisition coincided with the onset of a crypto downturn, leading to a $460 million goodwill impairment in Cboe’s second-quarter earnings in August 2022. Despite these challenges, Cboe Digital welcomed 13 investor partners into the business in November 2022.
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