Cboe Bets on Cryptocurrency Future with Acquisition of ErisX

Cboe Global Markets, which was the first US exchange to launch bitcoin futures, announced its first crypto-related acquisition on Wednesday. The exchange operator has entered into a definitive agreement to buy Chicago-based crypto exchange ErisX.

The financials of the deal were not shared, but Cboe said the purchase price was not material from a financial perspective.

Pending regulatory approvals, the takeover is expected to close in the first half of 2022.  Once the transaction completes, Cboe will rebrand its acquired crypto business as Cboe Digital.

ErisX, which is backed by US brokerage TD Ameritrade, has been granted two different regulatory designations, a derivatives clearing license and a designated contract market (DCM) license. The four-year startup has also made its products available via US brokers licensed as futures commission merchants (FCMs).

Additionally, ErisX launched its own physically-settled Ether futures contracts, meaning investors receive real cryptocurrency and not the cash equivalent. The move came shortly after the New York State Department of Financial Services (NYDFS) granted its first BitLicense of this year to ErisX.

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, added: “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 also revealed plans to form a Digital Advisory Committee comprised of retail brokers, crypto-leading firms and sell-side banks. In a sense, the industry group will be tasked with advising Cboe on the development of the Eris spot and derivatives markets.

The exchange operator said the committee has already enlisted a clutch of reputable crypto-centric firms including DRW, Fidelity Digital Assets, Galaxy Digital, Interactive Brokers, NYDIG, Paxos, Robinhood, Virtu Financial and Webull. These members will buy minority ownership interests in Cboe Digital and intend to serve as partners in the growth of the business.

Cboe rolled out the first bitcoin futures contracts in December 2017. However, the exchange decided in 2019 to stop offering the first regulated crypto derivatives, citing cooling enthusiasm for the virtual asset class after an all-out mania led by retail investors.