TrueDigital Ready to List the First Margined, Physically Derived Bitcoin Swap Contracts
TrueDigital will be launching the first margined, physically-delivered bitcoin swap contracts allowing institutional investors to gain exposure to cryptocurrencies in a similar way as when they trade foreign exchange (FX) and commodities. trueDigital is an affiliate of Commodities Futures Trading Commission (CFTC) regulated swaps execution facility trueEX.
Those derivatives offered by trueDigital have been certified by trueEX’s CFTC-regulated swap execution facility, known as SEF. They will be following SEF rules after they pass through a certification period of ten days.
The Physical delivery contract needs the underlying asset to be delivered on the maturity date of the contract. This is different compared to the cash-settled derivatives offered by other companies. Those cash-settled derivatives have been criticized since unregulated exchanges are very susceptible to market and price manipulation.
Nick Goodrich, director of business development at trueDigital, commented on the matter:
“We’ve received consistent market feedback that institutional investors want a physically-delivered product because it addresses the challenges and issues that arise from the manipulability of cash-settled derivatives. The product will resemble instruments institutions are comfortable with and will be a key building block in the institutional digital asset market.”
Traditional institutional investors are still far from being involved in the crypto market as much as they would like. At the moment, it is difficult to find institutional-grade platforms in the cryptocurrency world. However, companies are starting to develop different platforms specifically designed for wealthier investors and institutions.
trueDigital will be listing contracts in the next three serial months and quarterly maturities. The settlement will take place on the last Friday of each maturity month. Back in July, trueDigital launched the first market maker-based Bitcoin and Ether indices for institutional markets.