Happy Tuesday!

Traditional venues continue to steal focus — and clients — from crypto native platforms as institutional investors look for regulatory stability in the wake of the FTX collapse.

Let’s dig in.

Regulate

Institutional investors trading Bitcoin futures are flocking to CME over its crypto-native rival Binance a year on from the collapse of Sam Bankman-Fried’s FTX.

This month the CME overtook Binance in terms of open interest, the total number of outstanding contracts, on Bitcoin futures.

The trend isn’t slowing, said Duncan Trenholme, global co-head of digital assets at TP Icap, the world’s largest inter-broker dealer.

Since FTX, there has been a change in institutional investors’ attitudes — a “general shift in volume moving off unregulated offshore platforms onto regulated entities in major financial jurisdictions,” Trenholme told DL News in an interview today.

Trenholme said his firm has seen a flow of customers from across its broader business, in areas such as fixed income and equities, come and onboard with the digital asset business.

“It hasn’t been a surge, it’s been a kind of steady trend for the last 18 months,” he said.

He echoes Giovanni Vicioso at CME Group, who told DL News earlier this month that crypto investors sought the relative safety of his exchange.

Asset managers hold near $2 billion in long positions on Bitcoin futures on the CME, according to the CFTC’s latest commitment of traders report, which shows the open positions held by different traders.

The record open interest from asset managers has now eclipsed the 2021 high which preceded the launch of the first Bitcoin futures exchange-traded fund.

D-OJ Day

The Department of Justice has been investigating Binance over the past year, per reports from Reuters and others. Bloomberg said Monday it is now seeking a payment from the crypto exchange to drop its case.

Binance might have to fork $4 billion to US authorities to end an investigation into its business. Its founder Changpeng Zhao could still face charges in the US, Bloomberg said.

Other questions remain for the beleaguered exchange — can it afford such a big fine?

“The majority of the exchange’s trade volume has been zero-fee over the past year in a strategic attempt to bolster market share” at the expense of revenues, Clara Medalie, director of research at Kaiko, wrote on X, formerly Twitter.

Binance’s zero-fee promotions have worked, Medalie said, “but at what cost?”