Cboe to acquire ErisX in major move toward crypto trading

Rick Steves

Cboe Digital plans to develop and distribute digital asset indices for potential use in ETP creation and other derivative product opportunities.

Cboe has agreed to acquire ErisX, which operates a U.S.-based digital asset spot market, a regulated futures exchange, and a regulated clearinghouse.

This is a significant move from Cboe to further its position in the digital asset space, namely 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.

The transaction is expected to close in the first half of 2022. Terms of the deal were not disclosed.

ErisX was founded in 2018 as the crypto ecosystem was exploding in popularity but it was still lacking exchanges built with regulatory compliance and operational integrity at the fore, including high-performance infrastructure and real-time market surveillance.

The venue’s real-time clearing system addresses settlement risk while collateral management helps to allow seamless movement of collateral between spot and futures accounts.

Seven in ten institutional investors expect digital assets to be part of their portfolios in the future, but there is still lack of consistent regulation and a dearth of sufficiently robust exchange and clearing infrastructure. This is a major barrier to entry.

Enter Cboe, which plans to operate the digital asset business as Cboe Digital and has secured support from retail brokers, crypto-leading firms, and sell-side banks, who will advise Cboe on the Eris spot and derivatives markets.

Digital Advisory Committee, DRW, Fidelity Digital Assets, Galaxy Digital, Interactive Brokers, NYDIG, Paxos, Robinhood, Virtu Financial, and Webull have joined the advisory committee, and some of them intend to acquire minority ownership interests in Cboe Digital.

Ed Tilly, Chairman, President and CEO of Cboe Global Markets, said: “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.

“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.”

Thomas Chippas, CEO of ErisX, said: “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.

“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.”

Cboe Digital plans to develop and distribute digital asset indices for potential use in ETP creation and other derivative product opportunities.

Don Wilson, Founder and CEO of DRW, said: “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. Cboe’s acquisition of ErisX and creation of Cboe Digital with a group of institutional partners will accelerate this vision. I want to congratulate the ErisX team on this exciting milestone, and we look forward to continued collaboration on this project.”

Doug Cifu, Co-Founder and CEO of Virtu Financial, said: “As a global market maker and execution services provider, we have first-hand experience with how Cboe’s technological expertise and operational excellence can enhance markets. Cboe’s entry into the digital asset space leverages its impressive track record of bringing competitive technology and innovative solutions to regulated markets.”

Robert Gutmann, Co-founder and CEO of NYDIG, said: “NYDIG is proud to partner with Cboe and ErisX. Cboe has been at the forefront of financial innovation since its inception. By teaming up with ErisX, one of the most trusted platforms in the digital asset space, Cboe is once again showing it is committed to creating the future of finance. We share Cboe and ErisX’s vision of building an even more robust global marketplace for bitcoin spot and derivatives trading.”

Tom Jessop, President of Fidelity Digital Assets said, “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.”

Damien Vanderwilt, Co-President and Head of Global Markets of Galaxy Digital (TSX: GLXY), said: “As a leading financial services and investment management innovator in the digital asset, cryptocurrency, and blockchain technology sectors, Galaxy Digital is proud to partner with Cboe to enhance both our spot and derivatives execution capabilities, as well as our ability to provide deep liquidity to our institutional clients, supporting our mission to institutionalize digital asset markets. As with traditional financial market dynamics, the digital assets ecosystem critically needs scalable, well-governed, and unconflicted venues to promote reliable price discovery and capital exchange.”

Matthew McDermott, Global Head of Digital Assets at Goldman Sachs, also noted support, saying: “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.”

Chris Isaacson, Executive Vice President and Chief Operating Officer of Cboe, said: “Cboe’s entry into the digital asset space is directly consistent with our purpose to operate trusted, inclusive global markets that enable participants to define a sustainable financial future. With ErisX, in a single step, Cboe is able to enter the digital asset spot, data, derivatives, and clearing ecosystem. Now is the right time to fully embrace and help define this emerging asset class, and Thomas along with the ErisX management team of finance and technology veterans, are the right team to help us bring the benefits, structure and transparency of our trusted markets to the digital asset space.”

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