The largest options exchange in the US is moving in on a $1.6 billion bitcoin opportunity
Business Insider
Published Oct 26, 2017 08:25AM ET
Updated Oct 26, 2017 09:02AM ET
- Bitcoin presents a $1.6 billion revenue opportunity for exchanges, according to a wide-ranging report on cryptocurrencies by Bank of America Merrill Lynch (NYSE:BAC).
- Cboe, a first mover in cryptocurrencies among exchanges, appears the best positioned to capitalize on the opportunity, according to the bank.
- Cboe has partnered with Gemini, a digital currency exchange, to roll out bitcoin-linked products as early as this year.
Blockchain.info .
Cboe is positioning itself to capitalize on this explosive growth. Here's John Deters, chief strategy officer of Cboe:
"It has now evolved to a point that its utility as both a payment vehicle and a store of value is clear, while the overall popularity of digital assets has proven to be pretty resilient."
Deters told Business Insider that the exchange is exploring a broader family of cryptocurrency products in addition to the bitcoin futures product.
h2 $1.6 billion opportunity/h2The $1.6 billion bitcoin revenue figure is a bull case scenario, according to Bank of America, and is based on the assumption that cryptocurrency volumes end up at about 10% of current fiat currency trading volumes.
Here's the bank:
"The FX market is highly liquid. For example, spot FX volumes were $1.65tr as of the most recent BIT Triennial survey in April 2016. If these volumes were to materialize, with the same relationship between spot market and futures, and the same revenue per contract, the revenue pool would be about $1.6bn."
The estimate also assumes "there is no substitution of coin volumes for other contracts."
Just because Cboe is best positioned to take advantage of this opportunity, Bank of America doesn't think it will be the only firm to benefit from it. The bank expects other exchanges and market structure companies to jump on the bitcoin bandwagon if Cboe's futures or ETF products are successful.
"We would assume that other major derivative players like DB1’s Eurex and the CME would try to become involved," the bank said.
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Written By: Business Insider
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