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$24 billion in crypto ETFs rely on Kraken-owned CF Benchmarks - report

Published 05/03/2024, 10:08 AM
© Reuters

Kraken’s London-based crypto pricing provider, CF Benchmarks is capitalizing on the surge in spot-Bitcoin exchange-traded funds (ETFs), which began in the U.S. in January and recently expanded to Hong Kong. 

CF Benchmarks CEO Sui Chung told Bloomberg News that despite a somewhat rocky start, crypto ETFs in Hong Kong will soar to $1 billion in assets under management (AUM) by the end of 2024.

CF Benchmarks provides reference data for roughly $24 billion worth of cryptocurrency ETFs, including BlackRock’s U.S.-based fund valued at $15.9 billion. The firm generates revenue by licensing its benchmarks to these funds, benefiting from fees that increase with the funds' assets under management.

According to Chung, the majority of entities exploring spot bitcoin ETF pricing are asset managers and banks.

CF Benchmarks accounts for about half of the crypto benchmarking market and is collaborating with the newly launched Bitcoin ETFs in Hong Kong. CEO Chung expects crypto ETFs to expand next into South Korea and Israel, citing South Korea's high adoption of digital assets and preference for ETFs in savings strategies. 

Despite early forecasts of managing $5 billion in U.S. spot-Bitcoin ETFs this year, the actual figures have exceeded expectations, reaching more than four times the estimated amount. In January, the US Securities and Exchange Commission approved 11 spot bitcoin ETF applications from major firms including BlackRock (NYSE:BLK), Fidelity, Invesco, VanEck, and Franklin Templeton, granting them regulatory clearance. 

However, a recent pullback in investor interest has seen Bitcoin's value drop from a record high in March, and U.S. crypto ETFs saw massive net outflows.

CF Benchmarks expects revenue growth in the mid-double digits for the year. The UK firm reported revenues of £6 million ($7.5 million) in 2022 and plans to increase its staff by a third to over 40 employees. 

Since being acquired by Kraken in 2019, CF Benchmarks has also played a vital role in providing Bitcoin pricing for derivatives on the Chicago Mercantile Exchange, another major source of revenue for the company.

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