Cboe Global Markets, an equity exchange network, has revealed its plans to restructure its digital assets trading operations, which includes shutting down its digital spot market. The company will transfer digital asset derivative trading from Cboe Digital to its Global Derivatives and Clearing businesses. The closure of Cboe Digital Spot Market is scheduled for the third quarter of 2024. Additionally, the exchange intends to shift cash-settled Bitcoin and Ether futures contracts from the Cboe Digital Exchange to the Cboe Futures Exchange in the first half of 2025, pending regulatory review and necessary corporate approvals.
Cboe Clear Digital, the clearing arm of Cboe Digital, will be consolidated with Cboe Clear Europe under the leadership of Vikesh Patel, the President of Cboe Clear Europe. The potential reorganization is influenced by the status of Ether (ETH) as a security. Cboe Digital currently offers products for Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), USD Coin (USDC), and Litecoin (LTC).
The exchange expects to achieve significant cost savings by closing its digital spot trading division. Although the estimated savings of $2 million to $4 million in 2024 will have an “immaterial impact” on its net revenue for that year, the annual savings are projected to reach $11 million to $15 million.
Cboe Global Markets’ global president, David Howson, expressed confidence in the growing demand for exchange-traded digital asset derivatives, highlighting their role in managing crypto exposures, hedging risks, and improving capital and operational efficiencies.
In May 2022, Cboe expanded its digital asset presence through the acquisition of ErisX, which operated a spot market, derivatives market, and clearing platform. However, the timing of the deal coincided with the crypto winter. Consequently, Cboe declared a $460 million goodwill impairment in its second-quarter earnings in August 2022. This impairment reflects the loss incurred from purchasing an asset at a value higher than its book value, which later declines. In November 2022, Cboe Digital welcomed 13 investor partners into the business.
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