What does CMEs options announcement mean for the crypto markets?

Disrupting the Status Quo? What does this mean for the existing market for cryptocurrency options? Well, whereas players such as OKEx, BitMEX, Cryptofacilities, and Bitfinex have long been offering futures trading, the cryptocurrency options market is in a significantly more nascent stage of development.

These are European-style options based on either BTC or ETH, settled in cash at the point of expiry.

Deribit has certainly maximized its first-mover advantage, as it reportedly accounts for 95 percent of crypto options trading.

The CME offering is slightly different from Deribit options, which are based on BTC or ETH. CME intends to offer "Options on bitcoin futures," where the underlying asset is not bitcoin, but a bitcoin futures contract.

Options on futures are a more sophisticated type of "Derivative of derivative" instrument already used widely in the traditional financial markets.

In options on futures covering various markets, with daily volumes above 100,000 contracts traded for its top ten instruments.

No doubt the exchange is hoping it can replicate this success with options on bitcoin futures.

Unfazed Deribit's CEO certainly doesn't appear to be daunted by CMEs entry into the cryptocurrency options space.

"CMEs decision to move into the bitcoin options market represents a positive step for crypto derivatives overall. It demonstrates that there is an increasing institutional appetite for different types of crypto-backed financial instruments."

"The more closely that the cryptocurrency markets mirror the kind of products available on the traditional markets, the better to boost liquidity and drive further growth. Deribit has always known there's a strong demand for cryptocurrency options, and CMEs decision only supports this view."