CME Topples Binance’s Dominance In Bitcoin Futures Open Interest

Binance Bows To CME

The Chicago Mercantile Exchange (CME) has dethroned Binance as the leader in Bitcoin futures open interest, signaling a significant shift in the cryptocurrency derivatives market. This development follows Bitcoin’s price breaking through the $37,000 barrier, a feat not seen in over 18 months.

Market analysts have hailed this transformation as CME’s “flipping” of Binance. In this scenario, the critical metric is open interest, a fundamental concept in futures and options markets.

It measures the total number of outstanding contracts in this sector, reflecting the total number of contracts held by traders at any given period. However, the difference in the number of contracts held by buyers (longs) and sellers (shorts) determines the dynamics of open interest.

James Seyffart, a Bloomberg Intelligence research analyst specializing in exchange-traded funds (ETFs), investigated the growth of Bitcoin futures on the CME. Similarly, Will Clemente’s thought-provoking Twitter post sparked the discussion, raising hopes about the possible impacts of regulatory approval by the US Securities and Exchange Commission (SEC).

SEC’s Continuous Hesitation On Bitcoin ETF Approval

The US SEC continues to debate whether to approve a spot Bitcoin ETF, a contentious issue that has stalled numerous applications in recent years. The regulator’s unease stems primarily from concerns about market integrity, specifically the declaration of the markets from which Bitcoin ETFs derive their value.

Notable asset management firms like BlackRock and Fidelity have had filings deemed “inadequate” by the regulator due to missing declarations about the underlying markets of the proposed Bitcoin ETFs. However, recent developments in the crypto landscape suggest that the SEC’s stance may be changing.

For instance, the Chicago Board Options Exchange (CBOE) resubmitted its application for Bitcoin spot ETFs after receiving feedback from the SEC five months ago. Meanwhile, Fidelity, a major financial player, intends to launch a Bitcoin ETF product on the CBoE platform.

At the same time, BlackRock, the world’s largest asset manager, made headlines with its proposed Bitcoin ETF, which is set to be listed on the Nasdaq platform.

CBOE Collaborates With Coinbase On Surveillance-Sharing Agreement

Furthermore, the CBOE has announced plans to establish a comprehensive surveillance-sharing agreement with Coinbase, the leading US-based crypto exchange. This move is a significant step towards better transparency and regulatory compliance.

This strategic move is intended to address the SEC’s concerns about the depth and integrity of Bitcoin markets, especially BTC-related products. Per the CBOE, its agreement with Coinbase will involve “a surveillance-sharing agreement.”

This agreement will give the CBOE additional access to critical Bitcoin trading data on the Coinbase platform. The stock exchange platform will use this data to improve its monitoring capabilities and accomplish a more robust surveillance framework.

According to the filing, Coinbase accounted for approximately 50% of the US dollar to Bitcoin daily trading volume in May 2023, based on data from on-chain analytics platform Kaiko Research. This statistic is significant in light of the SEC’s reservations about the depth and reliability of Bitcoin markets, which it continues to cite as one of the impediments to approving Bitcoin-linked ETF products.

Despite the US regulator’s stance, many asset managers continue to submit their proposals for a spot BTC ETF approval, believing that the US SEC will approve theirs soon.