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A CME Group executive indicated earlier this week that futures contracts for Solana (SOL) and Cardano (ADA) could be available shortly on the Chicago Mercantile Exchange.
At CryptoCompare's Digital Asset Summit in London, Payal Shah, CME's director of equity and cryptocurrency products, addressed.
“We’re looking at it,” when asked if CME was considering issuing futures and other derivative products for cryptocurrency, Payal Shah stated: “We get a number of client requests for anything outside the top two - Solana, Cardano.”
SOL and ADA have consolidated their positions in the top 10 by market cap, despite the fact that they are still classified as “altcoins” because they aren’t Bitcoin or Ether (the latter of which is frequently referred to as an altcoin). SOL was the sixth-largest coin with a $44.3 billion market cap as of Friday afternoon, while ADA was the eighth-largest currency with a $39.5 billion market cap.
Solana, in particular, has witnessed a lot of development. In 2021, it was the best-performing coin, rising from $1.84 at the beginning of the year to $178.26 by December 15.
While there is undoubtedly interest, Shah believes CME will face two major difficulties before issuing SOL or ADA futures contracts.
First, the exchange’s futures contracts settle to an index since they rely on five distinct exchanges for pricing; if one of them goes down, the exchange still has an exact price and can settle its futures.
The other issue is one of regulation. “We need to know where to send the paperwork” she explained.
The Bitcoin and Ethereum products that CME already offers have seen a lot of interest. Last Monday, the commodities exchange started introducing micro Bitcoin and micro Ether futures options. Traders can acquire derivatives contracts in micro increments worth 1/10th of the price of Bitcoin or Ethereum.
Crypto derivatives, such as Bitcoin futures, allow investors to bet on the price of an asset without having to hold the underlying commodity physically. They are used by investors to speculate on price movement and to protect themselves against the asset’s volatility.
The spot market, on the other hand, deals with the price and delivery of an asset in real time. There is no way to buy or sell Bitcoin if it reaches a specific price in the future. The transaction is completed instantly.
“We’re off to a really good start. The screens are lit. We’ve had some really good trades,” Shah stated. “And just to unpack that a little bit, the micro Bitcoin futures contract we launched in May of last year, and already we’ve done close to 5 million contracts.”
The group’s debut Bitcoin futures contract has also seen a lot of growth.
“In the few years—just over four years—since we launched our initial futures contract, the standard Bitcoin future with five-time multiplier, we’ve seen that grow from doing 1,000 contracts a day to now 10,000 a day,” she stated. “That growth is mind-boggling.”
Outside of CME, crypto-native exchanges have been paying close attention to the crypto derivatives industry. In the last year, Crypto.com, FTX, and Coinbase have all made steps to cater to futures traders.
