CME announced Tuesday it plans to launch bitcoin futures in the fourth quarter, pending regulatory review.

Bitcoin rose to a record high above $6,400 Tuesday morning, according to CoinDesk, after the announcement by the world's largest futures exchange.

"Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract," Terry Duffy, CME Group chairman and CEO, said in a statement.

Duffy added on CNBC's "Closing Bell" that he is "confident" the CME's self-certification process at the U.S. Commodity Futures Trading Commission and full application process will go through. "We've been working with the regulator. They understand our application. And they understand our model very, very well," Duffy said.

The leading global exchange for options and futures trading is the latest entrant into the business of offering derivatives for bitcoin, the volatile digital currency, which is not listed on a major exchange.

Bitcoin over the last 12 months

Source: CoinDesk

The bitcoin futures contract will be cash-settled and based on the CME CF Bitcoin Reference Rate (BRR), which CME launched in November 2016 with London-based digital trading platform Crypto Facilities. The reference rate is a daily settlement price published at 4 p.m. London time, currently noon ET.

In less than 10 years, bitcoin has come a long way from being "mined" in homes and predominately used to buy illegal goods online. An entire industry has emerged to mine bitcoin, sell digital mining equipment and offer bitcoin trading services.

The growth of bitcoin derivatives is another step toward the development of the digital currency as a more established asset class. Fundstrat's Tom Lee said his call for bitcoin to top $20,000 by 2022 is based partly on expectations that bitcoin derivatives products will launch.