CME Group announces Ethereum futures product

CME Group will list an Ethereum (ETH) futures product next year, the firm said Wednesday.

CME Group, which gate-crashed the crypto derivatives world with a bitcoin futures contract at the height of the 2017 cycle, said on Wednesday — as bitcoin topped $20,000 that it would launch futures tied to Ethereum.

The product is coming to market February 8, subject to regulatory approval. It will be cash-settled and based on the firm's CME CF Ether-Dollar Reference Rate. According to CME's website, one contract will be equal to 50 ETH.

"Building on the success of Bitcoin futures and options, CME Group will add Ether futures to the cryptocurrency risk-management solutions available to trade in February," the firm said.

Building on bitcoin product

Since 2017, CME Group has built a sizable market for bitcoin futures. As per data from The Block, open interest in its bitcoin futures contract stood at over $1 billion at last check—making it one of the larger futures markets in crypto. As noted by my colleague Ryan Todd, CME's bitcoin futures market is a good proxy for institutional interest in bitcoin given firm's can link up to the market much in the same way as they can to CME's products in traditional derivatives. 

At the beginning of 2020, the firm launched its bitcoin options product.

The launch of futures represents an about-face for the firm, which has previously told The Block its focus was on bitcoin. In an interview at the end of 2019, Tim McCourt, CME Group's global head of equity index and alternative investment products, said that the exchange was "focusing on bitcoin futures since December 2017."

In a press release shared with The Block, McCourt said that the launch of ether futures was tied to the growth of its bitcoin futures and options market. 

“Based on increasing client demand and robust growth in our Bitcoin futures and options markets, we believe the addition of Ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency,” said McCourt.