CME Group Inc. is doubling down on its 2017 bet on cryptocurrencies.
Nearly two years after launching bitcoin futures, the world's largest exchange operator said Sept. 20 that it plans to launch options on those futures contracts in the first quarter of 2020, pending regulatory review.
The move comes as CME says it has seen growing interest in its bitcoin futures contracts since their launch in December 2017. Thus far, CME said there have been 20 futures expiration settlements and more than 3,300 individual accounts that have traded its bitcoin futures. Almost 7,000 CME bitcoin futures contracts have traded on average every day in 2019, the exchange giant said. By comparison, CME said in February 2018 that there were only about 1,000 bitcoin futures contracts trading daily.
"We believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk," Tim McCourt, CME's global head of equity index and alternative investment products, said in a statement.
CME is one of several Wall Street institutions that have dove headfirst into the digital assets marketplace in recent years. Rival exchange operator Cboe Global Markets Inc. also launched bitcoin futures around the same time as CME but has since ceased offering new contracts. Through its BAKKT LLC unit, Intercontinental Exchange Inc. plans to begin offering bitcoin futures trading Sept. 23.
The rush of institutional and retail money flowing into cryptocurrencies has been a sticking point for regulators, though.
Bitcoin futures, and the options they are based on, are regulated by the U.S. Commodity Futures Trading Commission. The SEC has also actively regulated the space, specifically looking at the initial coin offerings it deems securities offerings. Cryptocurrency proponents have been pushing the SEC to approve an exchange-traded fund that tracks bitcoin for several years now. But, while regulators have said a bitcoin ETF will likely receive a green light, they so far have been hesitant to approve any proposed models.
A day before CME's announcement, SEC Chairman Jay Clayton said there will need to be stronger regulations in place before bitcoin is traded on a major exchange, according to CNBC.
