CBOE Global Markets, which owns and operates the Chicago Board Options Exchange, has made a bold call on the future of cryptoassets. On Wednesday, the company announced that will buy Eris Digital Holdings (ErisX), which operates a U.S.-based digital assets spot market, regulated futures exchange and clearing house. In a statement announcing the deal on Wednesday, CBOE said buying ErisX “presents a unique opportunity for CBOE to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency.”
CBOE plans to operate the digital asset business as Cboe Digital. Price and other deal terms were not made public, other than that the purchase is being funded with a combination of cash-on-hand and increased debt, and is expected to close in the first half of 2022. CBOE said the purchase price is “not material from a financial perspective.”
According to a 2021 survey of institutional investor attitudes toward digital assets conducted by Fidelity, and furnished by CBOE, 7 out of 10 institutional investors expect to include digital assets in their portfolios in the future. However, globally consistent regulation of these assets is spotty, and exchange and clearing infrastructure is not sufficiently robust to allow these markets to achieve broader institutional uptake. CBOE sees itself as uniquely positioned to offer a digital asset marketplace that includes these regulatory compliance and transparency features.
CBOE has also secured the support of a broad range of market participants, including retail brokers, crypto-leading firms and sell-side banks, who are expected to form a Digital Advisory Committee tasked with advising it on the ongoing development of the Eris spot and derivatives markets. As members of the Digital Advisory Committee, DRW, Fidelity Digital Assets, Galaxy Digital, Interactive Brokers, NYDIG, Paxos, Robinhood, Virtu Financial and Webull are committed to ongoing engagement with Cboe Digital markets.
Certain (unnamed) members of the aforementioned Digital Advisory Committee also intend to acquire minority ownership interests in Cboe Digital and to serve as partners in the growth of the business.
“We believe our acquisition of ErisX, coupled with broad industry participation and support, will help us bring the regulatory framework, transparency, infrastructure and data solutions of traditional markets to the digital asset space,” said Ed Tilly, Chairman, President and CEO of CBOE. “ErisX has shown an unwavering commitment to improving spot and derivatives crypto trading, and I am confident that together we can not only meet the growing demand for institutional and retail trading solutions but also push the boundaries of digital asset innovation and unlock its next phase of growth.”
” Derivatives are an essential component of a scaled digital marketplace, and Cboe, as one of the world’s largest derivatives exchange operators, has the global customer network, international operations and innovative vision to not only grow ErisX, but the entire digital asset space,” said ErisX CEO Thomas Chippas. “With Cboe’s support and network of industry partners, ErisX will enable new and established firms to compliantly and confidently offer cryptocurrency spot and derivative products to their clients, making our transparent and trusted digital asset market the destination of choice for any market participant offering crypto spot or derivative trading services now and in the future.”
Response to the acquisition from the institutional community has, so far, been laudatory.
“The Cboe-ErisX combination represents an attractive opportunity to collaborate with a global exchange operator who can bring increased regulatory proficiency, resilient technology and product expertise to digital asset markets. We look forward to collaborating with Cboe Digital,” said Tom Jessop, President of Fidelity Digital Assets.
“This is an exciting development for institutional adoption of cryptocurrencies, and we look forward to finding ways to work closely with the newly created group, Cboe Digital,” said Goldman Sachs Global Head of Digital Assets Matthew McDermott.
“We founded ErisX with the vision of creating a transparent, well-regulated market for cryptocurrencies and cryptocurrency derivatives in order to facilitate adoption by traditional financial institutions,” said DRW Founder and CEO Don Wilson. “Cboe’s acquisition of ErisX and creation of Cboe Digital with a group of institutional partners will accelerate this vision.”
ErisX’s futures exchange and clearing house are regulated by the CFTC, and ErisX’s clearing house is registered with FinCEN and licensed in several U.S. states and territories. ErisX also runs a recognized and tested market surveillance program inclusive of trade practice surveillance and real-time surveillance with 24/7 capability and systems.
