CME Director: Bitcoin ETF listing application marks the maturity of the digital asset market

Sandra Ro, executive director and head of digitalization at the Chicago Mercantile Exchange Group (CME), believes that the increasing number of planned bitcoin exchange-traded funds (ETFs) is a sign that blockchain-based digital assets are maturing.

At the Tech Talk 5.0 conference this week, CME’s head of digitalization, Sandra Ro, spoke extensively about the derivatives market provider’s progress in exploring the blockchain industry, reviewing the firm’s new bitcoin benchmark and diving into the broader future of blockchain that the firm is looking at.

In response to audience questions, Ro highlighted the two ETF applications currently awaiting approval as a sign that more regulated products may be coming. Recently, SolidX Bitcoin Trust and Winklevoss Bitcoin Trust have each submitted ETF applications to the SEC. In addition, she said that existing products and applications prove that there is enough demand for additional regulated products in the digital asset space.

“In fact, some of the most exciting areas that can be explored are in the intersection between digital assets and tokenized fiat currencies and tokenized commodities,” Ro told attendees.

Ro also explained why her company believes the public blockchain space could be just as important to financial institutions as private alternatives, saying CME is doubling down on digital assets, blockchain and distributed ledger technology.

Although Ro believes that Bitcoin is the most mature digital asset, she was quick to point out that a number of other digital assets could also succeed or fail, even mentioning the recent sharp rise in market value of Steemit, a social network-based digital currency platform.

According to an audience survey conducted during the conference, those present were perhaps more familiar with Bitcoin now. When asked if attendees had ever held Bitcoin, 23% said they had, while 77% said they had not. A total of 79 people participated in the survey.

Proof of Concept (PoC) Strategy

In general, Ro discussed the four basic requirements that CME has for its digitization team.

First, she said, the team is investigating projects as part of a long-term strategy (three to five years). The team's previous work has focused on the short term, but looking ahead, the team is investigating some ideas that will take time to mature.

“We want to be able to make smart bets on where we want to be in the next three to five years,” she said.

Ro said they focus on projects and proofs of concept, distinguishing between the two categories based on the time and money invested.

She said CME has a project underway and once the idea becomes more concrete, the company would be willing to invest millions of dollars to make the concept a reality.

On the other hand, if insufficient time and funding are given to researching a proof of concept, the chances of it failing are higher.

Ro emphasized that the company’s motto for proof of concept is to experiment and fail fast.

Financial technology research work

Ro then discussed how CME is working with new companies to chart the future of financial technology.

For example, she said CME is investigating changes they might make in their handling of intellectual property so they can better collaborate with new players.

Ro believes that the traditional way of patenting technology developed by CME may not adapt to today's changing financial technology community.

In terms of the company’s external engagement with blockchain research in particular, Ro mentioned the company’s involvement with the Linux Foundation’s Hyperledger project, as well as other consortiums such as the Trade Fair Distributed Ledger Group (PTDL).