The operator of the world’s largest futures and derivative exchanges; CME Group Inc., is taking steps to begin Bitcoin trading.
CME has created gauges to track the cryptocurrency’s price, The Wall Street Journal reported. The gouges might form building blocks for futures contracts for bitcoin that would be traded on CME’s exchanges.
The CME website now contains a page for a CME CF Bitcoin Reference Rate & CME CF Bitcoin Real Time Index. These appear to the gouges that The Journal reported on. The CME Bitcoin Reference Rate (BRR) provides real time tracking and sets a once a day U.S. Dollar price for bitcoin.
The idea is to create a standard price for bitcoin which would make it easier to trade on CME’s exchanges. That means Bitcoin might soon become available in Forex and may become the world’s standard bitcoin price. The natural use for the BRR is to trade Bitcoin and Bitcoin-based products like exchange traded funds (ETFs) on CME’s exchanges.
CME operates the world’s largest and most diverse futures exchanges, those in Chicago and New York. Its’ exchange in Chicago is the center of derivative and futures trading in the United States.
This means that CME will start competing with private bitcoin exchanges some of which have a very bad reputation. One result of this would be to make bitcoin easier to regulate in the United States; which will not be popular with some of the currency’s biggest fans.
Creating a Global Bitcoin Market
The CME is working closely with six established bitcoin exchanges including OKCoin, a Chinese platform that is the world’s most active trading space for bitcoin. The company is trying to create a global clearing house for bitcoin and a profitable new market.
Bitcoin is becoming increasingly popular as a trading medium among people in developing nations; where currencies have little or no value, and strict controls make it hard for individuals to move money. It is also very popular in China and in the United Kingdom; where Brexit is raising doubts about the Pound Sterling’s future.
The world’s largest economy; China is the world’s biggest market for Bitcoin right now because of strict currency controls. Interest in the cryptocurrency is also growing in India where Prime Minister Norenda Modi has withdrawn the two largest bills from circulation. Modi’s announcement of that action on November 8, caused a spike in interest in Bitcoin in India.
It looks as if the market for Bitcoin is exploding and CME is moving to cash in. One has wonder if governments will let CME create a global bitcoin clearing house that would enable billions of dollars to flow into its markets in the form of bitcoin.