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This initiative is part of CME’s efforts to expand into tokenized collateral, with the company partnering with Google on a “tokenized cash” solution expected to debut later this year.
CME’s Terry Duffy (Photo by Michael Reaves/Getty Images)
Key points:
- CME Group CEO Terry Duffy mentioned that the organization is contemplating the introduction of its own token that may function on a decentralized network.
- This effort is part of CME’s exploration of tokenized collateral, in collaboration with Google on a “tokenized cash” project anticipated to launch later this year.
- Duffy’s statements represent the first clear indication of a proprietary CME-issued asset, as the firm gears up to offer 24/7 trading for all crypto futures alongside new futures contracts for Cardano, Chainlink, and Stellar.
CME Group CEO Terry Duffy has indicated that the derivatives firm is considering launching its own cryptocurrency.
In response to an inquiry from Morgan Stanley’s Michael Cyprys during the recent earnings call, Duffy affirmed that the firm is examining “initiatives with our own coin that we could potentially implement on a decentralized network.”
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The remark was succinct and arose in response to a query regarding the significance of tokenized collateral. In his reply, Duffy noted that the world’s leading derivatives exchange is diligently assessing various forms of margin.
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“So if you were to provide me a token from a systemically important financial institution, I would likely feel more at ease than if it were from a third or fourth-tier bank attempting to issue a token for margin,” Duffy stated. “We are not only looking at tokenized cash; we’re also exploring various initiatives involving our own coin.”
The organization is already developing a “tokenized cash” solution with Google that is expected to launch later this year, which will involve a depository bank facilitating transactions. The “own coin” referenced by Duffy seems to be a distinct token that the firm could “potentially implement on a decentralized network for other participants in our industry to utilize.”
The CME did not provide clarification on whether this “coin” would serve as a stablecoin, settlement token, or something entirely different when inquired by CoinDesk.
Nonetheless, if such an initiative is realized, the consequences could be substantial.
While CME Group has previously highlighted tokenization as a general area of interest, CEO Terry Duffy’s remarks this week signify the first instance where the exchange has explicitly considered the idea of a proprietary, CME-issued asset operating on a decentralized network.
The firm is set to initiate 24/7 trading for all crypto futures in the second quarter of the year and will soon offer futures contracts for Cardano, Chainlink, and Stellar.
CME’s average daily crypto trading volume reached $12 billion last year, with its micro-ether and micro-bitcoin futures contracts being notable performers.
The launch would not position CME as the first traditional financial institution to introduce its own token. JPMorgan has recently launched tokenized deposits on Coinbase’s layer-2 blockchain Base via its so-called JPM Coin (JPMD), subtly transforming how Wall Street transfers funds.
