Menu IconA vertical stack of three evenly spaced horizontal lines. 6 billion revenue opportunity for exchanges, according to a wide-ranging largest bitcoin exchange on cryptocurrencies by Bank of America Merrill Lynch.
Cboe, a first mover in cryptocurrencies among exchanges, appears the best positioned to capitalize on the opportunity, according to the bank. Cboe has partnered with Gemini, a digital currency exchange, to roll out bitcoin-linked products as early as this year. 6 billion revenue opportunity for Wall Street’s exchanges. That’s according to a wide-ranging report on cryptocurrencies by Bank of America Merrill Lynch, which said exchanges could benefit from a “significant revenue stream” from bitcoin.
And one exchange group has moved to the front of the queue to take advantage of this potential opportunity. That followed an earlier attempt by Bats Global Markets, which was acquired by Cboe earlier this year, to list a bitcoin exchange-traded fund from the Winklevoss twins. That attempt was rejected by regulators, with the Securities and Exchange Commission citing the lack of “surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. The Cboe deal with Gemini on bitcoin futures might help address that. The ETF and futures contracts do not depend on each other, but clearly, they would be reinforcing,” Bank of America said. If these efforts to apply existing exchange technology to work, then this creates a new revenue pool for the exchange industry. Cboe’s chairman and CEO, Edward Tilly, has taken a position on bitcoin that is contrary to that of his peers in the space.
At a recent conference he said, “like it or not, people want exposure to bitcoin. Meanwhile, rivals have shied away from cryptocurrencies. For instance, Adena Friedman, the CEO of Nasdaq, referred to initial coin offerings, a red-hot cryptocurrency-based fundraising method, as “bleeding edge” and CME president Bryan Durkin told Bloomberg his firm wasn’t looking at bitcoin futures. Cboe is positioning itself to capitalize on this explosive growth. It has now evolved to a point that its utility as both a payment vehicle and a store of value is clear, while the overall popularity of digital assets has proven to be pretty resilient. Deters told Business Insider that the exchange is exploring a broader family of cryptocurrency products in addition to the bitcoin futures product.