Once huge traditional financial institutions such as CME open up Bitcoin trading, the crypto asset trading industry may face a more severe competitive situation.
Under the bull market, crypto assets are gaining popularity. Traditional financial institutions also want to get a share of the pie. In addition to Bitcoin spot ETFs, which are popular among investors and institutions, direct Bitcoin trading is also on the agenda.
On Thursday local time, according to media reports, the Chicago Mercantile Exchange plans to launch spot Bitcoin transactions to meet Wall Street's needs.
CME said it would not comment. Overnight market US crypto asset trading platform after news broke$Coinbase (COIN.US)$It plummeted 9.4%.
Investors are worried that once huge traditional financial institutions like CME open up Bitcoin trading, the crypto asset trading industry may face a more severe competitive situation.
Brett Tejpaul, head of institutional services at Coinbase, publicly responded to the news:
We're happy to see yet another regulated body seeking to accelerate the adoption of cryptocurrencies in the institutional sector. Just like a Bitcoin ETF, this will benefit the entire ecosystem, and we look forward to providing CME with Coinbase's best-in-class escrow and professional services.
Over the past year, due to multiple factors such as deregulation, the price of Bitcoin has more than doubled, and Coinbase's stock price surged 244% during the same period.
But the bull market has also attracted more competitors to the crypto asset trading sector. CME, which already has a leading edge in cryptocurrency derivatives exchanges, if it were to enter the spot trading market, would obviously not be great news for Coinbase.
Although CME mainly provides services to institutions, Coinbase mainly serves retail investors — Q1 Coinbase's retail transaction revenue is US$935 million, which is far higher than the institutional revenue of US$85 million.
However, Wall Street institutional capital is very large, especially as regulations are loosened, more and more capital will flow into the cryptocurrency sector.
This is also reflected in Coinbase's performance: although retail trading volume increased 93% month-on-month in Q1, institutional trading volume increased by as much as 105%. The growth rate of Coinbase's institutional business revenue has also surpassed that of the consumer business.
Editor/Somer