Miami International Holdings Partners with Lukka, Launching Crypto Derivatives

Miami International Holdings, Inc. (MIH), the owner of Miami International Securities Exchange and a blockchain data company Lukka Inc, announced on Wednesday that they have entered into a strategic cooperation to launch crypto derivatives on MIH exchange platforms based on Lukka-supplied crypto data.

Miami International Holdings, Inc is also the owner of other options and equities trading platforms, namely, MIAX PEARL, LLC, MIAX Emerald, LLC, Minneapolis Grain Exchange, LLC, and Bermuda Stock Exchange.

The agreement provides MIH with a multi-year global license to use Lukka data to support its exchange-listed crypto derivative products, to be offered for trading on any of MIH exchange platforms.

MIH and Lukka expect the first products to include cash-settled Bitcoin and Ether futures and options, which will be listed on MGEX via the CME Globex® trading platform, subject to regulatory approval.

Other products expected to be listed will include Bitcoin Volatility (BitVol) and Ether Volatility (EthVol) futures and options, also subject to regulatory approval.

Thomas P. Gallagher, Chairman and CEO of MIH, talked about the development: "Our strategic alliance with Lukka allows us to leverage its institutional-grade crypto data to develop proprietary products in the U.S. and international regulatory frameworks that meet the emerging needs of the crypto-asset ecosystem. Lukka provides us with access to unique data and indexes that will further our objectives to introduce digital assets and products through our global group of exchanges, including futures on MGEX and innovative digital assets on BSX."

The Retail Trend Getting Real

The movement by MIH and Lukka is the latest example showing crypto groups are pushing into the highly regulated U.S. derivatives market as they seek to fulfil demand from retail traders making massive bets on digital assets.

The crypto industry is shifting deeper into regulated markets. It looks to develop a bigger user base and challenge existing financial companies like brokerages that already provide trading in equities and other financial assets.

Crypto groups are now seeking to develop footprints in the tightly supervised U.S. market by acquiring smaller firms already holding licenses to operate in America.

In January, Coinbase bought FairX, a small Chicago futures exchange, to make the derivatives market "more approachable" through its trading app.

Late last year, the move came after Crypto.com struck a $216 million deal for two retail businesses from the U.K.'s I.G. Index. In October last year, FTX US also acquired derivatives platform LedgerX.

Bigger crypto exchanges are buying Commodity Futures Trading Commission-regulated platforms that allow the offering of derivatives like options and futures to retail clients because there is a big demand for leveraged products in the retail client segment.

Last year marked a breakthrough for crypto derivatives. Volumes in the derivatives market overtook the spot or cash market for the first time. In January, derivatives trading represented about three-fifths of the overall market. In February, volumes in crypto derivatives registered almost $3 trillion, accounting for more than 60% of trading in cryptocurrencies, according to data provider CryptoCompare.