Cboe will join forces with CoinRoutes starting in 2021.
This will be the first time an institutional price index will move into the Chicago options exchange that is worthy of the name. What this has to do with a possible bitcoin ETF.
No institutional bitcoin adoption without institutional price indices. But with the professionalization of the crypto sector comes the institutional price discovery mechanism. As The Block first reported, Chicago options exchange Cboe will partner with CoinRoutes in the future and use its crypto price indices.
Starting in 2021, price data will be determined using the RealPrice Best-Bid-Offer (BBO), according to senior vice president Catherine Clay. This means that the stock exchange will soon have a price index on hand that also meets the institutional requirements of traders of Bitcoin Loophole futures and options.
Initially, the CoinRoutes index will be used for the professional portfolio design of Cboe traders. Only later next year does Clay see the data applied to financial products traded there as well.
I see the integration of the index as a very big opportunity for us to generate revenue. But equally important is bringing more participants into the digital asset ecosystem
I think the latter is the key point. Because although from a portfolio perspective a bitcoin allocation seems almost inevitable, the influx of „big money“ often fails due to a lack of market infrastructure. For large pension or hedge funds, for example, to dip their toes into the crypto market, professional offerings such as the CoinRoutes index are needed.
Is a bitcoin ETF coming soon?
Yet a race has long been on in Chicago to institutionalize the sector. In 2019, for example, the Cboe had to admit defeat to rival CME when it came to Bitcoin futures and discontinued derivatives due to insufficient trading volumes. The cooperation with CoinRoutes is therefore so relevant, as it could also open the door to a possible Bitcoin ETF. After all, the responsible supervisory authority, the SEC, had repeatedly cited deficient price indices as a reason for rejecting the same.
Typically, the SEC criticizes the lack of transparency of the underlying price indices. These allow market manipulation, for example. Professional indices such as the one from CoinRoutes, however, are based on actual order books, which is why they are considered to be much more tamper-proof.
Professional price indices in trend
The institutionalization of the crypto sector is an ongoing issue. As recently as early December, for example, BTC-ECHO reported on S&P Dow Jones Indices, which is partnering with New York-based strat-up Lukka to bring professional crypto indices to Wall Street.
While institutions are still trying to figure out how to participate in what is probably the best asset in the world, Bitcoin is blithely picking up where it left off and beating the next all-time high.