A slew of Wall Street giants are getting behind an upstart exchange looking to launch a suite of crypto futures, and it could be a big rival to Bakkt

Quick Take

  • A large group of Wall Street firms is getting behind a new crypto exchange 
  • ErisX, which is seeking regulatory approval to list futures tied to bitcoin, ether, bitcoin cash, and litecoin, announced it closed a fundraising round 
  • TD Ameritrade, DRW, and Virtu Financial are among the Wall Street heavy hitters backing the venture 

Brokerage giant TD Ameritrade, a slew of high-speed traders, and a long list of Wall Street firms are getting behind a brand new market for crypto called ErisX, the firm announced Wednesday. The venture, which is being led by trading veteran Thomas Chippas, would provide a place for individuals and institutions to trade cryptocurrencies and derivatives tied to digital assets, according to a news release put out by the firm. 

Chippas, previously head of quantitative execution at Citigroup, left his previous role to build ErisX in recent months, according to a spokeswoman. The goal of the platform is to offer a wide range of physically delivered futures for bitcoin, bitcoin cash, ethereum and litecoin. First, however, it will also offer a spot market for crypto trading. ErisX is a revamp of derivatives exchange Eris Exchange, which launched in 2010 and failed to gain traction. 

The firm expects spot trading of cryptos to begin in Q2 of 2019. Trading of its planned derivatives products is pending regulatory approval. The firm holds a DCM, or designated market contracts, which could give it a leg-up over other crypto trading platforms. 

Chippas, in an interview with The Block, declined to say exactly how much the firm has raised. Over 25 people are on the project’s team.

“In our opinion there is no lack of interest in building out markets for people wishing to trade digital assets and there is plenty of space for people to come in with a regulated exchange and clearing house,” Chippas said in a phone interview. 

Big name backers

TD Ameritrade, a broker that currently offers clients access to bitcoin futures trading on CME and Cboe Global Markets, is the best known name behind ErisX. Others include trading giants DRW, Virtu Financial, and Susquehanna International Group. The firm’s long list of backers also includes venture capital firms such as Digital Currency Group, Nex Opportunities and CMT Digital. “ErisX will eliminate many of the impediments to institutional adoption and usher in a new wave of market participants,” Don Wilson, founder of DRW, said in a news release. 

To be sure, the path to ErisX’s launch announcement has not been entirely smooth, according to one source, who said the project has been in the works since the beginning of the year. 

Still, in an interview with The Block, TD Ameritrade’s JB Mackenzie, managing director of forex and futures, said interest in digital currencies has persisted despite the bear market. “We expect we will have customers interested in participating,” Mackenzie said. “The digital asset economy has been developing so much over the last nine months and investors are crying for a regulated, transparent platform.”

Cboe Global Markets and CME Group, notably, launched their own bitcoin futures markets in December 2017. Cboe also has a futures product for ether ready, but is waiting for regulatory clearance before it goes live with it. 

Bakkt rival

Bakkt, the cryptocurrency platform announced in August by Intercontinental Exchange, the parent company of the New York Stock Exchange, has similar intentions to offer a trading platform for physically delivered futures for bitcoin. Elsewhere, Seed CX is aiming to launch a platform aimed at institutions for bitcoin and crypto derivatives trading.

Insiders told The Block that the new venture could serve as a serious competitor to Bakkt. 

“I think it’s fair to say that this is shaping up to be Bakkt’s  biggest competition,” one insider said. 

“It’s a smart team and it’s smart how they structured it,” another insider said. 

Still, Bakkt is working alongside two of the largest retailers in the world, Starbucks and Microsoft, and it could have a first-mover advantage. 

If you have more information relevant to this story, please confidentially reach out to Frank Chaparro at [email protected]

This post has been updated to include more information about Eris Exchange, the precursor to ErisX.