- Physically delivered Bitcoin swaps work like hedge interest rates or forex.
- They are not susceptible to market and price manipulation.
There are all indications that institutional investors will handle the next bull run in the cryptocurrency market, either through direct investments or though Physically Delivered Bitcoin Swaps. Institutional investors are now getting sufficient exposure to cryptocurrencies and they are getting into the cryptoshpere.
First Ever Margined Physically Delivered BTC Swaps
trueDigital has announced launching their ‘first margined’ physically delivered Bitcoin Swap contracts. This will give institutional crypto investors the tools they require managing their exposure to Bitcoin, in the same way, that they trade and hedge interest rates, Foreign Exchange and Commodities.
The trueDigital derivative contracts have been self-certified by the company’s affiliate trueEX’s CFTC-regulated swap execution facility (SEF) and they will be listed on its exchange, subject to rules following a ten-day self-certification period.
Director of Business Development at trueDigital Nick Goodrich said:
“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.”
trueDigital was launched in March 2018 as a regulated derivatives marketplace for cryptocurrencies, followed by the launch in July this year of the first market-based Bitcoin indices for institutional markets. Ten market makers including Genesis Global Trading, XBTO Group, DV Chain, Hehmeyer, Altonomy, Tilbe, and Elwood have already to contribute.
Institutional Money Coming into The World of Cryptocurrencies
trueEX operates the first CFTC-approved exchange that operates a Designated Contract Market (DCM) for swaps. As an exchange and recognized swap execution facility (SEF), trueEX executed over $9.7 trillion in trading volumes and $20.7 trillion in post-trade services ever since it began trading.
Like the BlockchainReporter wrote earlier, the success of trueEX shows that institutional money is now finding its way into digital assets such as Bitcoin when markets are struggling with the lack of regulatory and technological sophisticated platforms needed for the fully fledged institutional involvement and participation. Sunil Hirani, the CEO of New York Based trueEx said earlier in the year:
“The marketplace is sorely lacking the necessary foundation, infrastructure, and platforms that institutional investors have come to expect in other important markets.”
The physical delivery of derivatives contracts requires that the underlying assets are delivered when the contract has matured. This is unlike the prevailing method involving cash-based derivatives, which operate as anonymous spot pricing contributions on unregulated exchanges making them susceptible to market and price manipulations.
trueDigital plans to list contracts in the next three serial months and quarterly maturities with settlements happening on the last Friday of every maturity month.