Capital markets News

Cboe ditches spot crypto trading in digital assets reshuffle


Cboe acquired crypto firm ErisX in late 2021 and formed a new division Cboe Digital. Yesterday Cboe announced plans to shutter crypto spot trading and roll the derivatives trading and clearing into its main business, citing regulatory uncertainty around digital assets. 

The spot trading arm only supports four coins, but one of them is Ether which the SEC now considers to be a security

In reality the entire business is tiny compared to the rest of the company but its overheads are not. It expects savings of $2m-$4m this year and $11-$15m on a normalized annual basis.

Even on the derivatives side, open interest for Bitcoin is just 400 contracts compared to more than 26,000 for the CME.

Subject to regulatory review, the digital assets futures business will be rolled into the existing derivatives business. 

Cboe plans to continue clearing bitcoin and ether futures through Cboe Clear Digital, but it will share management with Cboe Clear Europe.

One thing that was not mentioned was that Cboe Digital was not a wholly owned subsidiary. In late 2022 it announced 13 minority outside investors, mainly crypto or proprietary trading firms. They included B2C2, Cumberland DRW, Jump Trading, StoneX and Talos. Shortly before the announcement, it revealed a $460 million write down on its ErisX investment.

“Bringing digital asset derivatives and clearing into our existing business lines enables us to leverage the full breadth of our global derivatives team and unlock the full value of Cboe to our clients around the world,” said David Howson, Global President of Cboe. “We expect to continue to see greater demand for exchange-traded derivatives to help manage crypto exposures, hedge risk and enhance capital and operational efficiencies.”

Nonetheless, Cboe continued to expand the offering this year, launching margined Bitcoin and Ether futures in January.

Cboe has other interests in the digital asset space, having invested in the Osaka Digital Exchange (ODX), Japan’s first secondary market for digital securities founded by SBI Holdings.