TradFi has sounded the rallying cry; TradFi will reshape the landscape of crypto derivatives.

SGX & Cboe Launch Crypto Futures

In November 2025, a subtle but significant shift occurred in the global financial landscape. The Singapore Exchange (SGX) announced the launch of perpetual futures for Bitcoin and Ethereum on November 24th. Almost simultaneously, across the Pacific, Cboe Global Markets announced the launch of its "Continuous Futures"—a product functionally equivalent to perpetual contracts—on December 15th.

This was not an isolated product launch, but a strategic collaboration spanning two continents.

This is not an isolated product launch, but a strategic collaboration across two continents.

Traditional financial giants (TradFi) are no longer content with the more "traditional" dated futures market dominated by the Chicago Mercantile Exchange (CME) since 2017. Their target has been set on the core profit center of crypto-native exchanges (CEXs, such as Binance and Bybit): a massive market with a daily trading volume exceeding $187 billion. TradeFi's entry has been extremely shrewd. They haven't simply copied; they've "reshaped" their products to comply with regulations. SGX, within the strict framework of the Monetary Authority of Singapore (MAS), has successfully "compliant" by explicitly limiting its products to institutional and accredited investors. Cboe's "continuous futures" represent an even more sophisticated regulatory engineering project. By setting an ultra-long 10-year maturity date and supplementing it with daily cash adjustments, it functionally replicates perpetual contracts (without the need for rolling over), but legally avoids the term "perpetual," which has been "tainted" by the offshore market. This approach provides the U.S. Commodity Futures Trading Commission (CFTC) with a stepping stone to approve a product with the same functionality but nominally "clean." This is typical TradFi wisdom: not circumventing regulation, but reshaping the regulatory discourse. SGX President Michael Syn's statement hit the nail on the head: "Bringing perpetual contracts into a regulated framework cleared by an exchange…we provide institutions with the trust and scalability they've been waiting for." At the heart of this battle is TradFi's attempt to use "trust" and "regulatory certainty" as weapons to wrest institutional liquidity from CEXs.

TradFi Giants' Hunt: A Weapon Called "Trust"

The Core Pain Point for Institutions: FTX's "Post-Traumatic Stress Disorder" (PTSD)

The collapse of FTX three years ago was a turning point in the institutional crypto narrative. It exposed the fundamental flaws of the crypto-native exchange (CEX) model: asset opacity, conflicts of interest, and catastrophic counterparty risk.

The collapse of FTX three years ago was a turning point in the institutional crypto narrative. It exposed the fundamental flaws of the crypto-native exchange (CEX) model: asset opacity, conflicts of interest, and catastrophic counterparty risk.

For a pension fund or large asset management company, the biggest risk is not Bitcoin price volatility (Market Risk), but rather the exchange's misuse of client funds or its absconding with the money (Counterparty Risk). Institutional investors are deeply uneasy about the high counterparty risk associated with "opaque, offshore, and unregulated crypto exchanges." The "original sin" of CEXs lies in their dual roles as market maker, broker, custodian, and clearinghouse. This is a structural conflict of interest strictly prohibited by traditional financial regulations (such as the Dodd-Frank Act). Institutional risk and compliance departments cannot answer a core question: "Who is my counterparty? Where is my collateral?" In CEXs, the answer is "the exchange itself." After the FTX incident, this answer became "unacceptable." TradeFi's "Silver Bullet": Central Counterparty Clearing (CCP) TradeFi's solution is structural. When institutions trade on CME or SGX, they are not trading "each other," but "clearinghouses." CME Clear, LCH Digital Asset Clear at the London Clearing House, and Cboe Clear U.S. act as central counterparties (CCPs). These CCPs intervene in every transaction through "contract replacement," becoming "the buyer of every seller and the seller of every buyer." This means that even if a counterparty defaults, the CCP uses its massive margin pool and default cascade fund to guarantee the fulfillment of the transaction. This "eliminates all counterparty, settlement, operational, default, and legal risks." CME and LCH are not selling “Bitcoin futures”; they are selling “Bitcoin exposure liquidated by CCPs.” The “asset protection funds” offered by CEXs (such as Binance’s SAFU Fund) are a form of “corporate guarantee,” the credibility of which depends on the CEX’s willingness and financial resources. TradFi’s CCP, on the other hand, is a “legal structure” whose credibility is backed by regulation, law, and a vast, transparent financial firewall. Institutional legal and compliance departments have no choice but to opt for the latter. The Different Paths of the Big Three 1. CME (USA) The Victory of "Compliant Brands" and the Lock-up of ETFs CME has become a "fortress" for institutional crypto derivatives in 2025. Its average daily trading volume (ADV) for crypto products reached $14.1 billion in the third quarter of 2025, and open interest (OI) reached a record $31.3 billion. An even more crucial metric is the number of "Large Open Interest Holders" (LOIHs)—a synonym for institutional investors—reaching a record 1,014 in September 2025, far exceeding the 2024 figure. Back in 2023, CME surpassed Binance on Bitcoin futures open interest (OI). This marked the beginning of institutional (“smart money”) liquidity flowing back from offshore CEXs to regulated TradFi. CME's victory wasn't just about compliance. It achieved a “structural weld” with the US spot Bitcoin ETF approved in 2024 through its benchmark rate (CME CF Bitcoin Reference Rate, BRR). Analysis points out that most US spot ETFs use CME's BRRNY (New York variant) to calculate their net asset value (NAV), while CME's futures contracts are settled based on the BRR (London variant). This creates what's known as “price singularity.” Authorized participants (APs) in ETFs—such as large investment banks—need to hedge their Bitcoin exposure when managing ETF creations and redemptions. They must use CME futures because only CME futures are perfectly linked to the ETF's NAV benchmark, thus eliminating "tracking error." CME thus locks in hedging liquidity from the trillion-dollar US ETF market. Perpetual contracts from Binance or Bybit, no matter how liquid, cannot provide this zero-basis-risk hedging for ETF APs. 2. SGX (Asia) Competing for the "Onshore" $187 Billion in Asian Liquidity Asia is the epicenter of this growth in perpetual contracts. But as SGX points out, these daily flows of up to $187 billion "are still primarily priced and settled on offshore platforms outside of Asia." SGX's strategy is very clear: leveraging Singapore's AAA rating and the clear regulatory framework of MAS, to provide family offices, hedge funds, and institutions in Asia with an "on-exchange," "trusted" trading venue. Its goal is not to attract retail investors from Binance, but rather institutional funds that want to trade cryptocurrencies but are prohibited from using offshore CEXs. Eurex (Europe) Cboe's "continuous futures" and Eurex's (via LSEG) FTSE index futures, both part of the Deutsche Börse Group, demonstrate that TradeFi's strategy is multifaceted. While Cboe's 23x5 trading hours are not as convenient as the 24/7 availability of CEXs, it offers regulated, centrally cleared, perpetual exposure, which is a significant improvement in itself. Eurex lowers the financial threshold for institutional participation through "nano" and "reduced-value" contracts. The Formation of the Compliance Premium: TradeFi's liquidity is currently far inferior to that of CEXs, but institutions are willing to pay the price for security. Research has found that CME's Bitcoin futures basis "consistently maintains a 4% annualized premium over Deribit (a crypto-native exchange)." This 4% premium represents the market price of "compliance premium" and "counterparty risk aversion." It signifies that the market is quantifying regulatory risk. Institutions are willing to forgo a 4% annualized return in exchange for trading on CME, thus mitigating custody risks and gaining access through their existing prime brokers (Prime Brokers). TradFi and CEX prices will never perfectly converge. They cater to two different risk appetites. The Battle for CEXs: CEX dominance remains absolute. In 2024, the top ten CEXs alone accounted for a staggering $58.5 trillion in perpetual contract trading volume. Binance is at the heart of this universe, consistently maintaining a market share between 35% and 43%, with monthly trading volumes often reaching trillions. Product breadth is CEXs' "secret weapon." TradFi currently only dares to touch BTC and ETH. CEXs (such as Binance, Bybit, and OKX) offer a "supermarket" with perpetual contracts for hundreds of altcoins. If a hedge fund wants to go long on SOL and short on AVAX, CME is powerless, but Binance can. CEXs can launch futures for a new hot token within weeks, while TradFi requires months of regulatory approval. The Achilles' heel: The global regulatory "golden hoop" CEXs are built on the quicksand of "regulatory arbitrage." Now, this quicksand is disappearing. Binance paid a $4.3 billion fine and admitted to money laundering in 2023, and its CEO resigned. Bybit is banned from operating in several countries, including the US and UK. OKX faces scrutiny for providing services to US customers between 2018 and 2024. CEXs are no longer facing the question of "whether to be regulated," but rather the survival issue of "how to be regulated." A 2025 report criticizes CEX governance for having "accountability voids" and using "techwashing" to cover up risks. This model of unchecked growth has reached its end. CEX's Response Strategies: Differentiation, Imitation, and Isolation. Faced with the intrusion of TradFi and tightening global regulations, CEXs are adopting multiple strategies. The first is "seeking legitimacy." CEXs are frantically "collecting" licenses globally. OKX boasts its extensive license portfolio in Singapore, Dubai, and Europe. Kraken attracts institutions with its compliance reputation in Europe and the US. This is their only way to attract institutional funding. Secondly, there's the "TradFi imitation." CEXs are frantically replicating TradFi's infrastructure. The most typical examples are Coinbase Prime and Binance Institutional. They attempt to emulate the "Prime Brokerage" model, packaging trade execution, custody, financing, and reporting into a "one-stop" service, thereby solving counterparty risk and operational challenges for institutions within their own walled gardens. Finally, there's "isolation and differentiation." The future of CEXs will inevitably be one of "dual personalities." They must split their business in two: 1. "Compliance" Like Coinbase, Kraken, and Binance.US, this entity will strictly adhere to KYC/AML, offer a limited range of products, have low leverage, and exclusively serve US and European institutions and ETFs. It will increasingly resemble CME. 2. "Offshore" entities, such as Binance and Bybit, will remain in "friendly" regions like Dubai and Seychelles, offering hundreds of altcoins, high leverage, and financial innovations. They will serve global retail and crypto-native funds. The intrusion of TradeFi forced CEXs to make this painful but necessary cut. CEXs unable to transform will be squeezed out of the market. The Rise of DEXs The core narrative of DEXs: Ultimate security with non-custodial transactions. Decentralized exchanges (DEXs) offer a more radical solution than TradFi. TradFi says, "Trust our clearinghouse (CCP)." DEXs say, "You don't need to trust anyone." On DEXs, transactions are executed on-chain via smart contracts, and user funds always remain in their own wallets. This fundamentally eliminates the custody and counterparty risks of CEX-style (FTX) transactions. For crypto-native funds, this is the gold standard for risk aversion. The DEX derivatives market is booming, with trading volume projected to double from $1.5 trillion in 2024 to $3.48 trillion by 2025. The "glass ceiling" of DEXs: the fog of liquidity and regulation. DEX trading volume is only a fraction of CEX volume. One commentator pointedly noted that a professional trader wanting to trade $100 million in futures "needs CME, Binance, or OKX—no DEX can handle that scale without massive slippage." Liquidity is DEX's first major weakness. The regulatory black hole is DEX's real major weakness. The "permissionless" and "anonymity" of DEXs are their core values, but also a nightmare for institutional compliance. DEXs face a "compliance paradox": they must choose between "decentralization" and "institutional adoption," and it's almost impossible to have both. How would a compliant fund (like Fidelity) use dYdX? It cannot perform KYC/AML on a DEX. How can it prove to the SEC (Securities and Exchange Commission) that its counterparties are not sanctioned entities? Until DEXs can resolve the issues of "on-chain identity" and compliance reporting, they will be excluded from the portfolios of large, regulated institutions (such as pension funds and sovereign wealth funds). This forces these institutions to choose only CME, SGX, and Cboe. Endgame Analysis: Liquidity Fragmentation and Market Restructuring The Solidification of the "Two-Track Market" The intrusion of TradeFi will not "kill" CEXs, nor will DEXs "kill" CEXs. Instead, the market is splitting into two (or even three) parallel ecosystems. Track 1: "Compliance-Institutional Market" Players: CME, SGX, Cboe, LCH... Products: Cash-settled (USD-settled) BTC/ETH futures. Clients: ETF issuers, large asset management companies, banks, hedge funds. Characteristics: High compliance, CCP clearing, high "compliance premium," slow innovation. This is a "risk management" market. Track Two: “Offshore - Crypto Native Market” Players: CEXs such as Binance, Bybit, and OKX; DEXs such as dYdX. Products: Stablecoin/crypto-margined perpetual contracts, covering hundreds of altcoins. Clients: Retail traders, crypto native funds, high-frequency trading firms. Characteristics: High risk, high leverage, rapid product innovation, regulatory uncertainty. This is a market of "speculation and alpha." The direct consequence of this "dual-track" system is fragmented liquidity. In TradFi, liquidity is highly concentrated (like the NYSE). But in the crypto market, liquidity is now fragmented between CEXs (Binance), DEXs (dYdX), TradFi (CME, SGX), and various L2s (Arbitrum, Base). This is an operational nightmare for institutions: "Each exchange needs separate risk management…the legal team has to negotiate dozens of separate agreements…the finance team has to manage collateral in multiple venues…this greatly consumes capital efficiency." Liquidity is abundant, but it's difficult to access it efficiently. Who is the ultimate winner? The answer is: "Crypto Prime Brokerages". Since liquidity fragmentation is inevitable, the "middleware" that aggregates these fragments becomes the market's "holy grail." The dilemma for institutions is that they don't want to open accounts in 10 places; they want to open an account in one place but be able to trade liquidity from all 10 places. This is precisely the role of the "Prime Brokerage" (PB) in TradFi. A crypto PB (such as Talos, Fireblocks) will provide a "unified margin account." Institutions entrust their assets to private placement (PB) platforms, which leverage their technology and legal framework to connect to all liquidity venues such as CME, SGX, Binance, and dYdX. Through a single PB interface, institutions can hedge on the regulated CME while simultaneously trading altcoins on Binance. The intrusion of SGX and CME has objectively created explosive demand for crypto PBs. The future winners may not be exchanges, but rather the PB platforms that can "glue" this fragmented market together for institutions. The weaponization of regulation: a geopolitical liquidity war. Regulation is no longer just a "rule"; it has become a "tool" for states to attract capital.

United States (CFTC/SEC): The US strategy is "co-opting." By approving ETFs and CME/Cboe, it is channeling institutional flow to domestic, regulated venues. The new government's crypto-friendly stance in 2025 will accelerate this process.

Asia (MAS/HKMA): Singapore and Hong Kong's strategy is "building a nest to attract phoenixes." They are building the clearest, most institutionally-friendly customized crypto regulatory framework globally. Their goal is to become the global institutional crypto hub outside the US. SGX's launch of perpetual contracts is a financial weapon in Singapore's national strategy.

European Union (MiCA): MiCA provides a unified market, but at the cost of being "expensive" and "bureaucratic." It is strong on stablecoins but may lag behind Asia's flexible regulation in derivatives innovation.

We will see liquidity pools fragmented geopolitically. A Zurich-based fund might prioritize Eurex; a Singaporean family office might find SGX its preferred option; and a US ETF issuer might be locked into CME. The utopian dream of “globally unified liquidity” for cryptocurrencies has been shattered. In its place is a fragmented global market divided by regulatory landscapes. This will be a restructuring without an end! The actions of the Singapore Exchange (SGX) and Cboe at the end of 2025 are not the end of the TradFi invasion, but rather the "Normandy landings" of this war to reshape the trillion-dollar derivatives landscape. This war will not have a single victor, but will lead to permanent bifurcation of the market. TradFi giants (CME, SGX), with their unparalleled "trust" weapon—Central Counterparty Clearing (CCP)—will firmly lock onto the most fertile territory of "compliant institutions," especially the hedging traffic tied to ETFs. The current dominant CEXs (Binance, Bybit) will not disappear. They are forced into a "split personality": one part of their business will "go ashore" to seek compliance, becoming bloated and slow; the other part will remain "offshore," relying on its unparalleled product breadth and innovation speed to serve high-risk crypto-native funds and global retail investors. DEXs (dYdX) represent the ultimate direction of technology, but their fatal flaw of a "compliance black hole" means they will remain an "experimental field" for institutions, not a "main battlefield," for the foreseeable future. Ultimately, this fragmented market has given rise to the real winner: Crypto Prime Brokerage. Platforms that can aggregate liquidity from TradFi, CEXs, and DEXs, providing institutions with "one-stop" margin and risk management, will become the "super connectors" of the new landscape. TradFi's encroachment will ultimately relegate "exchanges" to the sidelines, while "middleware" will reign supreme.