As this month approaches its end, popular altcoins such as Solana(SOL), Cardano(ADA), and Polkadot(DOT) will have real-time indices and reference rates that would lay the foundation for more derivative products and ETFs.
The CME Group, which operates a derivatives exchange based in Chicago and has the same name, has partnered with a cryptocurrency index provider, CF Benchmarks to release the latest rates on April 25.
Chainlink (LINK), Solana, Stellar Lumens (XLM), Cosmos (ATOM), Algorand (ALGO), Uniswap (UNI), Bitcoin Cash (BCH), Polkadot, Polygon (MATIC), Stellar Lumens (XLM) and Cardano, will have index pricing among the new reference rates.
It is also important to note that indices and reference rates are not actual tradeable investment products. A reference rate is basically an asset’s price data. However, for offering products such as futures contracts and ETFs, such data is an important prerequisite.
Gemini, itBit, Bitstamp, Coinbase, and Kraken will provide such data for the indices at launch.
In a press release, CME’s head of equity and FX products, Tim McCourt says that these latest benchmarks that today control 90% of the total investable cryptocurrency market cap, are curated in a way to enable users including institutions and traders to manage cryptocurrency price risks , price portfolios or create structured products such ETFs, in a more accurate and confident way.
Enough reasons are pointing toward the fact that CME will soon expand its crypto product offerings.
Last week, the director of equity and cryptocurrency products at CME, Payal Shah, said that the group is exploring offering futures contracts for Solana and Cardano.
As of now, CME offers Ethereum and Bitcoin futures along with future contracts for micro Ethereum and micro Bitcoin, which can be bought in denominations one-tenth the size of one BTC or ETH. So, CME has benefitted much from those future contracts.
Shah also disclosed that Micro Bitcoin futures, which were rolled out last May, have already created around 5 million contracts.
Shah also said that the growth of these futures contracts is “mind-boggling” she shares that since the rollout of initial futures contracts, just four years ago, the standard Bitcoin future has experienced a five-time growth, “we’ve seen that grow from doing 1,000 contracts a day to now 10,000 a day,” she adds.
Both crypto and traditional native firms share mutual excitement towards investment products that expose investors to popular altcoins.
In a press release, Elliot Johnson, chief investment officer at Evolve ETFs, said that physical-crypto ETFs at Evolve depend on CME CF reference rates for providing liquidity, tight tracking, and reliability [net asset value] for investors.
Johnson further shares her excitement to witness the CME CF index family growing and providing a base for “new, innovative ETFs in this highly coveted asset class.”
The company also has ETFs that offer investors exposure to automotive innovation, and cybersecurity, along with Bitcoin and Ethereum, which it started offering quite recently.
Evolve can probably generate ETFs to provide investors exposure to altcoins, once the reference rates are available.
Latest posts by Ritika Sharma (see all)