Ben Strack

<div id="highlights-block_6307c073fdf3c" class="highlights">
 <ul>
 <li>Company’s near-term focuses include adding margin-based futures contracts, market data tools, executives said</li>
 <li>“We very intentionally established a diverse group of partners,” Cboe Chief Strategy Officer John Deters said</li>
 </ul>
 
</div>



Cboe Global Markets is bringing aboard a slate of equity partners to help grow its digital assets business, just months after closing its acquisition of <a href="https://www.erisx.com" target="_blank" rel="noreferrer noopener">ErisX</a>.



The company is seeking to build out its crypto spot and futures capabilities to fill what executives called “a massive gap” in the space of offering market intermediaries a trusted venue for its retail and institutional clients.



ErisX operates a US-based digital asset spot market, as well as a futures exchange and clearinghouse regulated by the Commodity Futures Trading Commission (CFTC). <a href="https://www.cboe.com" target="_blank" rel="noreferrer noopener">Cboe</a>, which owns the world’s largest options exchange, <a href="https://cms.blockworks.co/cboe-sees-need-to-move-quickly-in-crypto-following-exchange-acquisition/" target="_blank" rel="noreferrer noopener">closed its acquisition</a> of the company in May as a way to enter the digital asset spot and derivatives marketplaces and is set to rebrand ErisX to Cboe Digital.



The new planned partners, each of which intend to take minority stakes in Cboe, are B2C2, DRW, GSR, Hidden Road, IMC, Interactive Brokers, Jane Street, Jump Crypto, Optiver, Robinhood, tastytrade and Virtu Financial. Executives did not reveal the specific size of the stakes.



The investors join other previously announced partner firms, such as Fidelity Digital Assets, Galaxy Digital, NYDIG and Webull. Cboe plans to form a digital advisory committee comprising the partner firms.



The incoming group of partners includes retail order flow providers, some of the largest market makers in the spot crypto world and other market makers focused more on derivatives pricing and trading, Cboe Chief Strategy Officer John Deters told Blockworks.&nbsp;



“We very intentionally established a diverse group of partners,” he said. “It’s that kind of mix which creates, we think, an ideal and healthy blend of participants, each with a little bit different focus and coming together simultaneously to make a vibrant and liquid market.”&nbsp;



<h3>ErisX and Cboe product roadmap</h3>



ErisX offers cash-settled futures contracts on bitcoin and ether. It offers spot trading on bitcoin, ether, bitcoin cash, litecoin and USD Coin.



In terms of the company’s product roadmap, ErisX President John Palmer told Blockworks that its “next push” is getting CFTC approval to trade margin-based futures contracts. Cboe hopes to roll those products out by the end of the year, he said.



Into 2023 and 2024, the firm will seek to offer additional futures contracts and spot trading for tokens beyond the five digital assets currently offered. Though Palmer did not name specific assets it would seek to offer, it noted that it would be considering other “top-traded tokens.”



“We certainly want to offer that very quickly and have a platform where participants can trade spot and derivatives and really get the benefit of capital efficiencies by having these things all clear at our clearinghouse,” Palmer said.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



Using market data based on actionable bid and offer prices from the spot crypto market, Cboe Digital also plans on developing a benchmark data stream to help market participants evaluate crypto execution prices, Deters said.



“Our industry is going digital over the long-term, and so making sure that our platform is built for that future, that we’re helping market participants and our clients engage in the market and helping them figure out opportunities to digitizing and interacting with their products is a “mission-critical” initiative for us and will keep us busy for quite a bit of time to come,” Deters said.



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Cboe To Add Slate of Partners to Grow Digital Asset Business

Sebastian Sinclair

<div id="highlights-block_62954c51ede8b" class="highlights">
 <ul>
 <li>The ether ETF listing by Cosmos tracks the physically-settled Purpose Ether ETF in Canada</li>
 <li>The success of Purpose Investment&#8217;s ether ETF performance has prompted Cosmos to provide investors exposure, the company said</li>
 </ul>
 
</div>



Cboe Australia said Monday it has listed Cosmos Asset Management&#8217;s ether exchange-traded fund (ETF), despite volatile conditions that continue to plague the crypto market.



Cosmos Purpose Ethereum Access ETF (CPET) invests in Canada&#8217;s Purpose Ether ETF, which holds physically settled tokens instead of derivatives like futures or options.



Purpose Investment&#8217;s Ether ETF, a world first, came to market via the Toronto Stock Exchange in April last year following clearance from Canadian securities regulators. 



Since then, the fund has accumulated more than $409.9 million in assets under management. The Australian subsidiary of Cboe Global Markets is hoping to tap into the fervor surrounding Purpose&#8217;s ETF, with expectations of domestic investors responding in a similar fashion to Cosmos&#8217;.



“As investors continue to seek cryptocurrency exposure, it’s important the market provides them with choice and access,&#8221; said Cboe Australia CEO Vic Jokovic in a statement. &#8220;CPET offers Australians unique access to the world’s first physically settled Ether ETF and we’re excited to watch its progress.&#8221;



That view may be somewhat optimistic as declining interest has coincided with a drop in crypto prices. Earlier this month, the debut of <a href="https://cms.blockworks.co/first-spot-crypto-etfs-in-australia-underwhelm-traders-amid-market-downturn/" target="_blank" rel="noreferrer noopener">21Shares&#8217;</a> Australian spot bitcoin and ether ETFs fell short of market expectations, posting trading volumes of around $656,000 and $415,000 respectively.



On the same day, Bloomberg Intelligence Senior ETF Analyst Eric Balchunas called 21Share&#8217;s debut “shockingly timid” in a <a href="https://twitter.com/EricBalchunas/status/1524722087084105728" target="_blank" rel="noreferrer noopener">tweet</a>. Lack of interest has also not been the only roadblock facing Australian-based crypto ETFs.



In April, Cboe Australia decided to halt the launch of the Cosmos Purpose Bitcoin Access ETF, 21Shares along with ETF Securities citing “standard checks” as the primary reason for the <a href="https://cms.blockworks.co/australian-bitcoin-and-ether-etfs-delayed-due-to-standard-checks/" target="_blank" rel="noreferrer noopener">delay</a>. 



Not to mention, Australian-based Cosmos&#8217; newest ether ETF listing comes at a time when the markets have been checkered by periods of extreme volatility following a significant decline from peak prices witnessed late last year. 



The market is beginning to flash signs of a reversal amid a broader uptick in global commodities and equities. Bitcoin is once again <a href="https://cms.blockworks.co/crypto-markets-rally-as-bitcoin-reclaims-30000-once-again/" target="_blank" rel="noreferrer noopener">on the rise</a> above the $30,000 level. 



Still, more rallies are required to shore up investor confidence amid the current downward trend that has persisted since the bellwether crypto&#8217;s peak of around $69,000 in November.



CPET is available through Cboe Australia market participants and supporting Australian stockbrokers.



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Cboe Australia Lists Cosmos’ Physically-Settled Ether ETF Amid Market Woes

<div id="highlights-block_6272e422d24e2" class="highlights">
 <ul>
 <li>ErisX, operator of crypto spot market, futures exchange and clearinghouse, to be rebranded as Cboe Digital </li>
 <li>Cboe is uniquely positioned to offer basis trading and exchange for physical transactions down the line after the acquisition, the company said</li>
 </ul>
 
</div>



Cboe Global Markets has closed its acquisition of institutional cryptocurrency exchange ErisX, with the newly combined company’s executives saying they intend to integrate quickly while digital asset markets remain hot.&nbsp;



Chicago-based Cboe first <a href="https://cms.blockworks.co/cboe-sees-enormous-future-for-crypto-as-it-acquires-crypto-market-provider-erisx/">announced the deal</a> six months ago.



ErisX operates a US-based digital asset spot market, as well as a regulated futures exchange and clearinghouse. Set to be rebranded as Cboe Digital, the business will function as a subsidiary run by ErisX CEO Thomas Chippas.



A company of 55 people at the time of acquisition, ErisX will now leverage Cboe’s more ample resources, Chippas told Blockworks.&nbsp;



“We get to find crossover opportunities and product development opportunities to grow the existing Cboe customer base, but [we have] complete freedom to continue new digital asset products over here at ErisX,” Chippas said.&nbsp;&nbsp;



Cboe Chief Operating Officer Chris Isaacson called the acquisition “super complementary,” adding it gives the company its first presence in the digital assets sector.



“We’ll integrate only where it makes sense, but we realize that in this asset class we need to move quickly,” he told Blockworks. “Keeping that agility with this wholly-owned subsidiary is a great move.”&nbsp;&nbsp;



Cboe operates the largest options exchange in the US. An average of $86.5 billion is traded on Cboe’s equities exchanges daily. The average number of US options contracts and US futures contracts traded each day total roughly 9.8 million and 213,000, respectively.&nbsp;



<h3>Product plans</h3>



ErisX Chief Operating Officer Matt Trudeau said the highest priority for the company in the near term is adding margin capability to its clearinghouse. It has an application pending with the Commodity Futures Trading Commission (CFTC) to offer margin crypto futures that are both physically settled and cash settled.



The soon-to-be Cboe Digital will also now look to expand its spot offerings beyond bitcoin, bitcoin cash, litecoin and ether.



Down the line, Cboe is uniquely positioned to offer products, such as basis trading and exchange for physical transactions, that involve both the spot and futures markets, Trudeau told Blockworks.



“One of the things we expect to be able to do is offer those products more efficiently from an operational and cost standpoint than anybody who’s got a standalone cash-settled futures market or a standalone spot market,” he said.



Cboe also intends to develop a benchmark data stream — based on actionable bid and offer prices from the spot crypto market — to help market participants evaluate the appropriateness of crypto execution prices, the company said in a statement.



<h3>Bridging TradFi and crypto</h3>



Isaacson said part of the attractiveness of buying ErisX was the company’s “intermediary-friendly platform.” The deal was estimated at $400 million, according to data by M&amp;A advisory firm Architect Partners. The companies did not disclose the sale price.&nbsp;



“It will allow for traditional finance players that are more and more capable and ready to adopt digital assets to now come on and adopt the asset class,” he said.



Ryan McCulloch, an investment banking associate at <a href="https://www.architectpartners.com/" target="_blank" rel="noreferrer noopener">Architect Partners</a>, said in a research note that the need for traditional financial players to have crypto exposure has become “table stakes.” He likened the Cboe-ErisX deal to other so-called “bridge transactions” between companies, such as Deutsche Borse Group and Crypto Finance; Mastercard and Cipher Trace; and PayPal and Curv.



“As the crypto sector develops, consolidation via acquisition will continue as traditional players continue to choose the buy over build option,” McCulloch wrote. “ErisX isn’t the largest crypto derivatives exchange, but their focus throughout development on robust regulatory compliance is a major driver of value to traditional financial players such as Cboe.”



Many traditional institutions are already getting involved in crypto, Chippas said, adding that there is a massive opportunity to grow the pie.&nbsp;&nbsp;



“There are lots of people today that want to access these products that are unwilling to open an account for one asset class at one particular provider,” he said. “They’re looking to access these products via the traditional intermediaries.”



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Cboe Sees ‘Need to Move Quickly’ in Crypto Following Exchange Acquisition

<div id="highlights-block_6269671d58261" class="highlights">
 <ul>
 <li>Cboe Australia said Tuesday the funds would not go ahead as expected due to pending &#8220;standard checks&#8221;</li>
 <li>Asset managers ETF Securities and 21Shares had hoped to push through their crypto ETFs following the go-ahead from ASX Clear last week</li>
 </ul>
 
</div>



Three of Australia&#8217;s crypto ETFs set to launch Tuesday have been postponed, with pending &#8220;standard checks&#8221; as the primary reason given for the delay. According to a statement from <a href="https://www.cboe.com.au/wp-content/uploads/2022/04/Cboe-Funds-Market-Circular-22005ETF.pdf" target="_blank" rel="noreferrer noopener">Cboe Australia</a> on Tuesday, ETF Securities&#8217; bitcoin and ether ETFs, which track the underlying price of their respective digital asset in Australian dollars, will not commence as expected. 



&#8220;A further update will be provided in the coming days,&#8221; Cboe said.



ETF Securities, along with 21Shares, had hoped to push through their funds on <a href="https://cms.blockworks.co/first-australian-spot-bitcoin-ether-etfs-to-go-live-next-week/" target="_blank" rel="noreferrer noopener">April 27</a>, following a green light from the country’s primary clearing house for capital markets, ASX Clear.



Cosmos Asset Management’s <a href="https://cms.blockworks.co/australia-gets-go-ahead-to-list-countrys-first-bitcoin-etf-next-week/" target="_blank" rel="noreferrer noopener">bitcoin ETF</a>, which is expected to invest in shares of Canada&#8217;s Purpose Bitcoin ETF, has also been delayed.



While the official line being given by Cboe states the funds would not go ahead as a result of the checks, the <a href="https://www.afr.com/companies/financial-services/failure-to-launch-crypto-etfs-hit-listing-snag-20220426-p5ag4s" target="_blank" rel="noreferrer noopener">Australian Financial Review</a> reported a &#8220;powerful but undisclosed third-party broker&#8221; had blocked the listings.



A “service provider downstream” has been fingered as the responsible party, though details of which provider ETF Securities and Cosmos are referring to were not given, per the report.



The report cites trading of the funds has been delayed due to a &#8220;prime&#8221; or &#8220;executing&#8221; broker whose blessing is required for the go-ahead.



Kanish Chugh, head of distribution of ETF Securities, reportedly told the Australian news outlet the delay was not the fault of ETF Securities, its ETFs or the exchange, and the news had caught the asset manager off guard.



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Australian Bitcoin and Ether ETFs Delayed Due to ‘Standard Checks’

<div id="highlights-block_625ebf0f96c1e" class="highlights">
 <ul>
 <li>Australia is to receive its first publicly listed bitcoin ETF via Cosmos Asset Management</li>
 <li>The approval follows proposed legislation from Australia&#8217;s ruling party seeking to regulate crypto</li>
 </ul>
 
</div>



Australia is set to receive its first bitcoin ETF as early as next week, the <a href="https://www.afr.com/chanticleer/bitcoin-etfs-get-the-green-light-20220419-p5aela" target="_blank" rel="noreferrer noopener">Australian Financial Review</a> reported Monday.



Cosmos Asset Management&#8217;s bitcoin ETF — the first of its kind for Australia — stands poised to take the crown following a green light from the country&#8217;s primary clearinghouse for capital markets, ASX Clear.



Trading could begin on <a href="https://www.cboe.com.au/about-cboeaustralia" target="_blank" rel="noreferrer noopener">Cboe Australia</a> as early as April 27 following a seven-day notice period to investors, clearing participants, brokers and market makers, beginning Wednesday.



Like many ETFs centered on the oldest cryptocurrency, Cosmos&#8217; product will invest in shares of the world&#8217;s first bitcoin ETF — the Purpose Bitcoin ETF — which listed via the Toronto Stock Exchange in Canada more than a year ago.



Should demand for Cosmos&#8217; ETF follow a <a href="https://www.purposeinvest.com/thoughtful/purpose-investments-bitcoin-etf-crosses-1-billion-in-assets-under-management-on-one-month-fund-anniversary" target="_blank" rel="noreferrer noopener">similar trajectory</a> to that of Canada, between $550 million to $750 million could flow into the fund within a week as investors scramble to grab hold of one of the world&#8217;s most volatile asset classes while avoiding direct market exposure.



According to the report, ASX Clear has four market participants ready to front the 42% margin requirement for settlement risks, including one retail and three institutional clearing participants.



<a href="https://www.asx.com.au/services/clearing/asx-clear.htm" target="_blank" rel="noreferrer noopener">ASX Clear</a> is the clearing house for all Australian shares, structured products, warrants and Australian Securities Exchange equity derivatives.



Approval of the country&#8217;s first bitcoin ETF follows proposed legislation from Australia&#8217;s ruling party seeking to regulate custody, DAOs, crypto taxation and digital asset service provider licensing, <a href="https://cms.blockworks.co/australia-seeks-licensing-of-crypto-exchanges-via-digital-services-act/" target="_blank" rel="noreferrer noopener">among other measures</a>.



While the incumbent Liberal Party faces an uphill battle at the polling booth in five weeks time, the approval of a bitcoin ETF potentially clears a new path for Australia&#8217;s march toward the nascent asset class.



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Australia Gets Go-Ahead to List Country’s First Bitcoin ETF Next Week

Jacquelyn Melinek

<div id="highlights-block_6171c7defd0f4" class="highlights">
 <ul>
 <li>Cboe’s acquisition of ErisX provides it with the opportunity to grow tremendously by “blending the best of both” traditional and crypto markets, Deters said</li>
 <li>While the company is acquiring ErisX, it will be a separate subsidiary from Cboe and will operate under its digital asset business as Cboe Digital, Deters said</li>
 </ul>
 
</div>



Cboe Global Markets has agreed to acquire crypto spot and futures market provider Eris Digital Holdings (ErisX), at a time when the digital asset space continues to boom.&nbsp;



The deal is expected to close in the first half of 2022, subject to regulatory approvals and other closing elements, the company said in a statement.



“This deal gets us into digital assets,” John Deters, executive vice president and chief strategy officer at Cboe Global Markets, told Blockworks in an interview. Cboe’s acquisition of ErisX provides it with the opportunity to grow tremendously by “blending the best of both” worlds between traditional finance and crypto markets, Deters said. 



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="400" height="327" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Image-from-iOS-14.jpg" alt="JOHN DETERS, EXECUTIVE VICE PRESIDENT AND CHIEF STRATEGY OFFICER, CBOE GLOBAL MARKETS" class="wp-image-9770" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Image-from-iOS-14.jpg?w=400 400w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Image-from-iOS-14.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Image-from-iOS-14.jpg?w=314 314w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Image-from-iOS-14.jpg?w=319 319w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Image-from-iOS-14.jpg?w=268 268w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Image-from-iOS-14.jpg?w=80 80w" sizes="(max-width: 400px) 100vw, 400px" /><figcaption>John Deters, executive vice president and chief strategy officer at Cboe Global Markets; Source: Cboe</figcaption></figure></div>



<a href="https://cms.blockworks.co/erisxs-trudeau-ira-investors-want-crypto-exposure/" target="_blank" rel="noreferrer noopener">ErisX</a> operates a US-based digital asset spot market, a futures exchange and clearing house regulated by the Commodity Futures Trading Commission (CFTC). Its clearing house is also registered with FinCEN as well as licensed in many US states, the company said. Cboe is a global provider of market infrastructure and tradable products with an average amount of $78.14 billion traded on its US Equities exchanges daily.&nbsp;



While the company is acquiring ErisX, it will be a separate subsidiary from Cboe and will operate under its digital asset business Cboe Digital, Deters said. “We want the businesses to have degrees of freedom to operate with the speed and flexibility that it needs,” he said.&nbsp;



<h3>Competitors edge&nbsp;</h3>



Competitors in the space include global markets company CME Group and newcomers of regulated derivatives like the cryptocurrency-based exchange FTX. But, Deters said it’s fairly easy to differentiate <a href="https://www.cboe.com/tradable_products/equity_indices/flex_options?gclid=CjwKCAjwn8SLBhAyEiwAHNTJbWys1AJlsoIR2PmA_33hIM49oDNZw7EJLypJvvvU1C2TnfPGcuGjyRoCERkQAvD_BwE&amp;gclsrc=aw.ds" target="_blank" rel="noreferrer noopener">Cboe</a> and ErisX from their competitors.&nbsp;



“CME’s product does what it’s supposed to do, but it’s constrained by the technology stack, the regulatory framework and platform it’s traded on. So, I think there’s probably some limit to how far penetrated that product ultimately gets,” Deters said. “The overlap is there but it’s not significant and we think the size of the circles and the size of the areas we’re playing in, with a complete stack in a single venue, represents the growth opportunity for the future,” he added.&nbsp;



Meanwhile, Matthew Trudeau, chief operating officer at ErisX, said that ErisX’s focuses solely on crypto and hones in on this asset class through a regulated lense, which has given them the edge and flexibility to delve into that market. As the company operates in a heavily regulated way, it requires them to vet products thoroughly and acknowledge risks and implications beforehand, Trudeau said.&nbsp;



“It’s not just a niche product to us,” Trudeau said. “All we do, all day, every day, is think about crypto, crypto derivatives and the crypto industry,” he added.&nbsp;



As it relates to FTX and some of the other crypto exchanges, Trudeau said, “I think the recent (regulatory) moves are validation for us and show the importance of the US market, globally, for this asset,” he said. “There’s a lot of discussion about moving crypto offshore, but ironically it seems like there’s a lot of stuff moving onshore at this point…. Everybody seems to want to get into the US and I think some of the M&amp;A activity you’re seeing is evidence of that,” he added.&nbsp;



As a regulated digital asset market provider, ErisX is no stranger to working with officials. So, as it continues to grow its US market offerings, Trudeau said those elements will benefit Cboe and its digital asset expansion. Their framework provides “potentially faster, more nimble and effective products compared to those who operate in an offshore environment,” like Bahama-based FTX, Trudeau said.



<h3>“There’s a massive release of potential here”</h3>



After the acquisition, the company can add in adjacent assets, options and other relative products, Trudeau noted. “But it’s not like we have to build a brand new platform to do that,” because it already has the infrastructure available, he said. “There are near-term products we can offer related to crypto native products and new products related to commodities and securities,” Trudeau added.&nbsp;



From a general point of view, the company plans to work with regulators on the digital asset space and solve existing problems related to the current marketplace, Deters said.&nbsp;



“We think the future (of crypto) is enormous, I think we’re only seeing a small fraction of what it could be,” Deters said. “Once you solve (some) problems and provide clarity to the space, there’s a massive release of potential here,” he added.



In the future, Trudeau and Deters said they see the digital asset market expanding exponentially. “There’s unbounded potential in this market,” Trudeau said. “Traditional financial markets and crypto will converge and we’re seeing this happen already &#8212; both will take something from one another,” he added.



Trudeau estimates that in 10 to 15 years, all traditional assets will live in a crypto native market. “That’s a pretty exciting place to be&#8230; and a phenomenal thing to think about,” he said.&nbsp;