Cboe Clear has received approval from the Commodity Futures Trading Commission (CFTC) for an amended order of registration as a derivatives clearing organization, enabling it to expand its range of cleared products.
The CFTC’s decision allows Cboe Clear to provide clearing services for digital asset futures on a margined basis for futures commission merchants, in addition to the previously authorized fully collateralized futures and swaps.
Margined crypto futures contracts enable institutional traders to trade crypto futures while requiring less upfront collateral.
Under the amended order, trades will be executed and cleared through a set of member futures commission merchants approved by the CFTC. The Chicago Board Options Exchange clearinghouse will act as the central counterparty, reducing default risks associated with these transactions.
John Palmer, the president of Cboe Digital, expressed the value of derivatives as a tool for investors to gain market exposure and manage risk. He highlighted the time-tested nature of derivatives and their contribution to the investment landscape.
While the Cboe is among the entities that have submitted applications for crypto spot exchange-traded funds (ETFs), the Securities and Exchange Commission (SEC) has thus far rejected all spot ETF applications.
Cboe Digital, licensed by the New York Department of Financial Services (NYDFS), combines spot and futures markets on a single platform. According to a recent blog post, its spot trading market offers trading options for Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and USDC.
In addition to spot trading, Cboe Digital’s futures exchange is preparing to launch both physically delivered and cash-settled contracts for Bitcoin (BTC) and Ethereum (ETH).
Amidst these developments, House Republicans have drafted a proposal addressing regulatory gaps in the cryptocurrency industry.
The proposed legislation assigns specific roles to regulatory bodies, designating the Commodity Futures Trading Commission (CFTC) as the authority responsible for overseeing crypto commodities while assigning the Securities and Exchange Commission (SEC) the responsibility of regulating digital securities.