As a crypto investor with a few years of experience in this volatile market, I’ve seen my fair share of ups and downs. The latest news from Cboe Global Markets regarding their reorganization of digital assets trading operations caught my attention.
Cboe Global Markets, a major player in the equity exchange network, has unveiled plans for a restructuring of its digital asset trading business. A notable aspect of these plans is the elimination of their digital spot market.
Cboe announced that it intends to transfer digital asset derivative trading from its Cboe Digital platform to its Global Derivatives and Clearing businesses. The Cboe Digital Spot Market is scheduled to shut down in the third quarter of 2024. Additionally, Bitcoin and Ether cash-settled futures contracts currently listed on the Cboe Digital Exchange will be moved to the Cboe Futures Exchange during the first half of 2025, contingent upon regulatory approval and internal authorization.
Under the new structure, Cboe Clear Digital, the clearing division of Cboe Digital, will operate in alignment with Cboe Clear Europe. This realignment will be overseen by Vikesh Patel, who serves as president of Cboe Clear Europe. The exchange made this announcement in a statement.
“These changes are being made as part of Cboe’s strategic review, taking into consideration the lack of regulatory clarity in the digital space, and are aligned with Cboe’s longer term strategy.”
As a researcher exploring the offerings of Cboe Digital, I’ve discovered that they provide trading instruments for Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), USD Coin (USDC), and Litecoin (LTC). The ongoing reorganization may involve consideration of Ethereum’s potential classification as a security.
The conversation mentioned that it stood to gain substantial cost savings by shutting down its digital trading desk, estimating savings of $2-4 million in 2024 as insignificant compared to its total revenue for that year. However, they projected annual savings of around $11-15 million starting from 2025.
“David Howson, the president of Cboe Global Markets, anticipates that the need for exchange-traded derivatives in the digital asset sector will persist, providing a means to control crypto investments, mitigate risks, and optimize capital and operational resources,” is one way to paraphrase the original statement.
In May 2022, Cboe significantly increased its involvement in the digital asset sector by acquiring ErisX. This company managed a spot market, derivatives market, and clearing platform. After the acquisition, ErisX was rebranded as Cboe Digital. However, the unfortunate timing of this deal came just before the onset of the “crypto winter.”
As a researcher studying Cboe’s financial performance, I discovered that in August 2022, the company reported a goodwill impairment of $460 million in its second-quarter earnings results. This impairment was due to the ErisX acquisition, which saw Cboe overpaying for an asset whose value later decreased below its initial purchase price. In November 2022, I observed that Cboe Digital managed to attract 13 new investor partners into their business.
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2024-04-26 20:51