CF Benchmarks, the digital assets index provider of the prominent U.S. crypto exchange Kraken, has positioned itself as a significant player in the burgeoning market for spot-Bitcoin exchange-traded funds (ETFs). This year has seen a notable surge in Bitcoin ETF activity, beginning with launches in the United States in January and expanding to Hong Kong recently, Bloomberg reports.
CF Benchmarks (website) is at the forefront of providing reference data for crypto ETFs, managing benchmarks that underpin approximately $24 billion worth of these funds, predominantly Bitcoin-focused. Among these is BlackRock’s US-based ETF, which alone accounts for $15.9 billion in assets under management. CF Benchmarks earns licensing fees from these funds, which increase as the funds’ assets grow.
Representing about half of the crypto benchmarking market, CF Benchmarks has also started working with newly launched Bitcoin ETFs in Hong Kong. Sui Chung, the CEO of CF Benchmarks, highlighted the firm’s vision of extending their reach to other regions with high crypto adoption, such as South Korea and Israel.
The company’s performance has exceeded expectations, particularly in the US, where the assets for spot-Bitcoin ETFs using its indexes were anticipated to reach $5 billion this year but have surged to more than $20 billion. For the Hong Kong market, Chung projects up to $1 billion in managed funds by the end of 2024.
Despite the recent downturn in Bitcoin prices, which saw the cryptocurrency drop about $14,000 from its March peak of nearly $74,000, CF Benchmarks anticipates robust growth in revenues, projected to rise by mid-double digits this year. This optimism is supported by their 2022 revenue of £6 million ($7.5 million) as reported in their UK accounts.
Since Kraken acquired CF Benchmarks in 2019 for a nine-figure sum, the London-based firm has expanded its role, not only in providing Bitcoin pricing for derivatives on the Chicago Mercantile Exchange—a key revenue source—but also in shaping the landscape of cryptocurrency investment through ETFs. Plans are underway to increase their headcount by about a third, bringing the total to more than 40 employees, as the company scales up its operations to meet the growing demand in the crypto ETF space.