- CME Group (+0.35%) looks set to offer investors broadened access to a greater range of cryptocurrencies on traditional markets, launching 11 new reference rates and real-time indices for cryptocurrencies that represent around 90% of the global market cap of digital assets.
- Reference rates are necessary because investors, especially institutional investors, need a place to keep score from consistently, and are used as a benchmark for other financial products.
Ask any seasoned trader what’s the price of Bitcoin and most will reply that they don’t know and it depends on where you’re asking about.
And that’s because with great decentralization comes great diversity of expression on what the price of any specific cryptocurrency is, which is a major hurdle to broader institutional acceptance of cryptocurrencies.
Because institutional investors have reporting requirements, the ability to formulate something as assumed and basic as a price for an asset, is a necessary prerequisite to participation.
Help could be coming as CME Group looks set to offer investors broadened access to a greater range of cryptocurrencies on traditional markets, launching 11 new reference rates and real-time indices for cryptocurrencies that represent around 90% of the global market cap of digital assets.
CME Group already offers reference rates for Bitcoin and Ether and that’s facilitated their purchase by institutional investors, but will now work with CF Benchmarks and expand those reference rates and indices to Algorand, Bitcoin Cash, Cardano, Chainlink, Cosmos, Litecoin, Polkadot, Polygon, Solana, Stellar and Uniswap.
Reference rates are necessary because investors, especially institutional investors, need a place to keep score from consistently, and are used as a benchmark for other financial products.
The move will allow traders and fund managers to evaluate portfolio risk and create structured products like exchange-traded products (ETPs) based on cryptocurrencies.
While ETPs have been available for many years in Europe and Canada, they have only recently gained approval in the U.S., which saw its first Bitcoin futures-based ETF launched last October.
Analysis by Bloomberg Intelligence earlier this month suggests that cryptocurrency ETPs could swell to over US$120 billion in assets under management by 2028.
