CME launches bitcoin options trading as Fidelity's crypto unit expands in Europe
As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
CME LAUNCHES BITCOIN OPTIONS TRADING: On Monday, CME Group (CME) launched its bitcoin options trading product for investors and traders. “In response to growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure, CME options on Bitcoin futures, are now trading,” the company said on its website. “The value of options on Bitcoin futures is based on the regulated CME CF Bitcoin Reference Rate and settles into actively traded Bitcoin futures.” CME, which was among the first U.S. regulated exchanges to offer bitcoin futures, traded 54 options on futures during the debut session.
FIDELITY’S CRYPTO UNIT EXPANDS IN EUROPE: Fidelity Digital Assets, the cryptocurrency division of Fidelity Investments (FIS), will act as a custodian for bitcoin held by investment firm Nickel Digital Asset Management, Reuters’ Tom Wilson and Simon Jessop reported Tuesday. Fidelity Digital Assets’ Europe head Chris Tyrer said he sees challenges to institutional investor participation in crypto, like regulation, quality of service providers and high volatility, gradually reducing. “We see those three factors slowly resolving themselves, and as a result we are seeing a pick up in institutional investor interest,” he told Reuters, adding synchronized regulation in the European Union would be helpful for service providers.
GEMINI LAUNCHES IN-HOUSE INSURER: Gemini Trust Company announced Thursday that it launched a new in-house insurer, Nakamoto Ltd., to raise coverage against crypto theft. In a blog post, head of risk Yusuf Hussain said, “Nakamoto -- the world’s first captive to insure crypto custody -- allows us to increase our insurance capacity beyond the coverage currently available in the commercial insurance market. This insurance solution gives Gemini Custody $200M in insurance coverage -- the largest limit of insurance coverage purchased by any crypto custodian in the world. Gemini customers can now also purchase additional insurance for their segregated crypto assets. In addition, we have Hot Wallet insurance coverage for your crypto we hold in our online Hot Wallet. Lastly, U.S. dollar deposits held at Gemini are eligible for FDIC ‘pass through’ deposit insurance.”
GRAYSCALE SEES HEDGE FUND DEMAND: Bitcoin investment trust Grayscale Investments took in $608M last year with the majority of inflows, roughly 71%, coming from institutions like hedge funds, up from 66% in 2018, Bloomberg’s Olga Kharif reported Thursday. Grayscale’s assets under management have increased to roughly $2B and the Grayscale Bitcoin Trust (GBTC) is the largest bitcoin investment trust. “It’s clear that we’re experiencing institutional adoption,” said Michael Sonnenshein, managing director at Grayscale. “The asset class is experiencing increased validation from legacy companies like Fidelity and CME, signaling to institutions and the investment community as a whole that crypto as an asset class is here to stay.”
TWO PRIME TO LAUNCH TOKEN: Hong Kong-based crypto firm Two Prime is launching the FF Accretive Token, a digital coin invested in a basket of blockchain-based holdings, according to a Thursday blog post by COO Alexander Blum. The post said, “The FF Accretive Token combines the features of a close-ended fund, asset-backed token, and a secure store of value. The first FF Accretive Token will be a first-of-its-kind purchasing option that derives its value from investments in real-world projects in the blockchain industry such as BabelFinance, one of the world’s largest commercial crypto finance institutions, and leading crypto investment fund NGC Ventures…Through a token release mechanism called the Continuous Token Offering, the FF Accretive Token replicates the private equity approach of staged, de-risked financing. The CTO will continuously release additional tokens into circulation in line with real demand, and this model may be replicated in future FF Accretive Tokens in a multitude of verticals such as green technology and smart cities, bringing real value to investors.”
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), DPW Holdings (DPW), Kodak (KODK), Ideanomics (IDEX), Riot Blockchain (RIOT), Pareteum (TEUM) and Social Reality (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose roughly 9% this week to $8,775 in U.S. dollars, according to TradeBlock.