CF Benchmarks Expands Amidst Crypto ETF Growth

Surge in Crypto ETFs

CF Benchmarks, a London-based crypto pricing provider under Kraken, is capitalizing on the expanding market of spot-Bitcoin exchange-traded funds (ETFs). This trend began in the U.S. and has recently extended to Hong Kong. The company projects a significant increase in crypto ETFs in Hong Kong, anticipating assets under management (AUM) to hit $1 billion by the end of 2024.

Strategic Role in the Market

The firm plays a crucial role by providing reference data for approximately $24 billion in cryptocurrency ETFs, including major funds like BlackRock’s. CF Benchmarks benefits financially by licensing its benchmarks, with revenue growth tied to the increase in the funds' AUM. The primary users of their pricing data are asset managers and banks.

Market Expansion and Prospects

Currently, CF Benchmarks holds about half of the crypto benchmarking market and collaborates with newly launched Bitcoin ETFs in Hong Kong. The company foresees further expansion into South Korea and Israel, driven by high digital asset adoption and the popularity of ETFs in savings strategies in these regions.

Exceeding Expectations and Challenges

Despite initial projections of managing $5 billion in U.S. spot-Bitcoin ETFs, actual figures have significantly surpassed expectations. This growth was bolstered by the U.S. SEC's approval of several spot bitcoin ETF applications from major firms. However, a recent decline in investor interest has affected Bitcoin's value and led to substantial net outflows from U.S. crypto ETFs.

Financial Outlook

CF Benchmarks anticipates mid-double-digit revenue growth this year, following its 2022 revenue of £6 million ($7.5 million). The company plans to expand its workforce by over 30% to support its growing operations. Since its acquisition by Kraken in 2019, CF Benchmarks has enhanced its revenue through Bitcoin pricing for derivatives on the Chicago Mercantile Exchange.

Through strategic expansion and leveraging its market position, CF Benchmarks is poised to benefit from the burgeoning crypto ETF market, despite current challenges.