Cboe to “Realign” Crypto Business

Just two years after writing down $460 million on its deal to buy digital asset spot trading and clearing firm ErisX, Cboe has announced a “realignment” of the digital assets business, including the closure of the spot trading business.

Following a strategic review, Cboe cites a “lack of regulatory clarity” in the US and says it is to “refocus” the business “to leverage its core strengths in derivatives, technology and product innovation while realising operating efficiencies for both Cboe and its clients”. The exchange group expects to save between $2 and $4 million from the changes, which will see Cboe Digital – the business built after the ErisX acquisition – folded into the broader derivatives and clearing business.

John Palmer, who became president of Cboe Digital from his role as CEO of ErisX, will become head of US derivatives market development, and report to Cathy Clay, EVP, head of global derivatives. The transition is expected to take place, subject to regulatory approval, in early 2025. Cboe received regulatory approval for margined crypto products in July 2023.

Cboe will maintain ownership and operation of Cboe Clear Digital, the clearing arm of Cboe Digital, and plans to align Cboe Clear Digital with Cboe Clear Europe, its European clearing house, under unified leadership. Cboe Clear Digital will continue to facilitate the clearing of bitcoin and ether futures, while the European entity will continue to serve as the pan-European central clearing party (CCP) for Cboe’s European equities and derivatives exchanges across the EU, UK and Switzerland. Vikesh Patel, the current president of Cboe Clear Europe, will now also oversee US clearing.

“Refocusing our digital asset business enables us to refine our strategy, leveraging our core strengths in derivatives, technology excellence and product innovation to help maximize opportunities for our business and deliver efficiencies for Cboe and our clients,” says Fred Tomczyk, CEO of Cboe Global Markets. “We believe these changes enable greater optimization and strategic alignment for our business across geographies and asset classes, further supporting our long-term growth strategy.”

David Howson, global president of Cboe, adds, “Bringing digital asset derivatives and clearing into our existing business lines enables us to leverage the full breadth of our global derivatives team and unlock the full value of Cboe to our clients around the world. We expect to continue to see greater demand for exchange-traded derivatives to help manage crypto exposures, hedge risk and enhance capital and operational efficiencies. Optimising our derivatives and clearing business operations and product development across borders and asset classes enables us to better serve our diverse client base and sharpen our strategic focus.”

The latest shift continues a rocky relationship between Cboe and crypto markets generally. In 2017 it became the first US exchange to list bitcoin futures, but lost out to rival CME as the latter surged ahead in terms of volumes. This led to Cboe de-listing the contracts in 2019, but it re-entered the market with the ErisX buy in 2022.