The U.S. Commodities Futures Trading Commission has quietly approved an institutional crypto derivatives platform for margined futures.
On June 5, the CFTC announced that it had approved an amended order of registration for Cboe Clear Digital LLC.
The firm, also known as Cboe Clear, has been granted permission to “clear additional products,” it stated. Furthermore, the derivatives clearing organization (DCO) must act in compliance with the Commodity Exchange Act.
Cboe Crypto Futures Are a Go
Those “additional products” are margined crypto futures, according to the announcement.
“The amended order permits Cboe Clear 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.”
Margined crypto futures contracts allow institutional traders to trade crypto futures while putting less collateralized capital upfront.
Additionally, trades are executed and cleared through an approved set of member futures commission merchants. The Chicago Board Options Exchange clearinghouse will act as a central counterparty to reduce default risks.
John Palmer, president of Cboe Digital, said:
“Derivatives are a time-tested and valuable tool that enable investors to gain market exposure and manage their risk,”
Only Institutions Welcome in Crypto?
The approval comes at a time when scrutiny of the crypto industry in the U.S. is at peak levels. It could be a message that only wealthy institutional investors are welcome. Regulators are trying hard to crush anything that retail traders have access to, Binance being the latest.
Van Eck strategy advisor Gabor Gurbacs also noted the institutional angle, commenting:
“While everyone is caught up in the Binance SEC case institutions entered the chat, without people noticing,”
Gurbacs worked with the OCC (Office of the Comptroller of the Currency) on getting approval for a margined model. “The CFTC was waiting to see how the CME contracts end up functioning,” he said.
“Obviously they are working well so looks like approvals are back on the table.”
The NYDFS-licensed Cboe Digital combines both spot and futures markets into a single platform. Its spot trading market currently offers trading in Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and USDC, according to a June 4 blog post.
Additionally, its futures exchange is preparing to launch physically delivered and cash-settled contracts for both BTC and ETH.
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