Again, and again, and again, fiat based global exchanges are rushing head first into new and advanced crypto products. The CME is set to announce a new $ETH product for traders to lust after. And given the scale and scope of the Ethereum network, this is big.
The Chicago-based exchange announced on Monday that it has partnered with a group of large cryptocurrency exchanges to create an Ether Reference Rate and Ether Real Time Index, which will provide standardized and audited pricing data for ETH/USD trading pairs, as well as a daily benchmark price.
“The Ether Reference Rate and Real Time Index are designed to meet the evolving needs of this marketplace,” said Tim McCourt, managing director and global head of equity products and alternative investments at CME Group. “Providing price transparency and a credible price reference source is a key development for users of Ethereum.”
Both the Ether Reference Rate and Ether Real Time Index will be calculated by UK-based trading platform Crypto Facilities, which last week launched the first regulated ethereum futures product. Pricing data will be supplied from two cryptocurrency exchanges: San Francisco-based Kraken and Luxembourg-based Bitstamp.
“Ether, the second largest cryptocurrency, experienced incredible adoption and growth in 2017, evolving into the leading blockchain for smart contracts,” said Dr. Timo Schlaefer, CEO of Crypto Facilities. “We are excited to be contributing to the strong community that has developed around the Ethereum network by providing a reliable reference rate and real-time Ether-Dollar price.”
The move paves the way for CME — which launched its first cryptocurrency futures product last December — to eventually list ethereum futures on its trading platform. This will provide institutional investors with more exposure to the nascent asset class, and it will give cryptocurrency miners with the ability to hedge their profits more effectively.
This is huge news for a set of Ethereum based hedge funds which have come to market in the last year, giving them another liquid option to hold or trade within their fund.
The CME has been a leader in crypto futures and we continue to hear and believe that more of these products are on the way. Think “Crypto ETF’s” – they are coming. We promise.