Cboe Digital reassures customers of asset safeguards

Quick Take

  • Cboe Digital President John Palmer issued a letter to customers today to outline its policies about asset safeguards.

U.S.-regulated crypto exchange and clearinghouse Cboe Digital issued a letter today to customers to reassure them about asset safeguards as questions mount about the FTX liquidity crunch.

"To protect member funds and assets, Cboe Digital is obligated to completely segregate customer assets from our own assets by holding them at a bank in a specially designated account, for the benefit of our members, and separate from the operating funds of Cboe Digital," Cboe Digital President John Palmer wrote, adding that the company has "strict policies" in place to ensure customers' funds are safe. 

Palmer noted that these actions are required by the U.S. Commodity Futures Trading Commission (CFTC), which regulates Cboe Digital's exchange and clearinghouse businesses.

The letter also explained how Cboe approaches several possible risks of unregulated markets, among them counterparty risk and customer asset protection.

"Cboe Digital acts as a central counterparty enabling buyers and sellers to trade with each other," the letter states. "We do not act as a trading counterparty versus our customers."

Cboe Digital was recently rebranded from ErisX, the spot and derivatives exchange that Cboe Global Markets first said it would acquire in October 2021. Cboe Global Markets announced in August that its ErisX business would be renamed Cboe Digital. It also said it was in talks with a host of potential equity partners, with Robinhood, Jump Crypto, Jane Street and Interactive Brokers among the possibilities.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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