TrueEx is launching the first-ever margined, physically delivered Bitcoin (BTC-USD) swaps through its subsidiary trueDigital. The physically delivered Bitcoin swaps will target institutional investors looking to manage exposure to Bitcoin.
The Bitcoin swaps were developed in collaboration with the Commodity Futures Trading Commission (CFTC). TrueEx being an accredited Designated Contract Market (DSM) will therefore subject the physically delivered Bitcoin swaps to the DSM regulations in what the company describes as a self-certification filing. The product will be listed for trading in trueDigital’s platform after a 10-day self-certification period.
TrueEX is not seeking a new clientele but rather introducing the product to its existing institutional investors currently trading in swaps linked to interest rates.
Solution to manipulation
The way the physically delivered Bitcoin swaps work is that on the day the contract matures, the asset shall be delivered to the investor. This method is in contrast with existing systems where upon maturity derivatives are settled with cash. The delivered product will take the form of instruments the institutional investors are familiar and comfortable with.
trueEx physical delivery offering seeks to address the issue of “market and price manipulation” as Nick Goodrich, the Director of Business development at trueDigital explains, “…institutional investors want a physically-delivered product because it addresses the challenges and issues that arise from the manipulability of cash-settled derivatives.”
Another digital currency exchange platform Bakkt is also launching its physically delivered Bitcoin swaps. The digital currency exchange operator being supported by Intercontinental Exchange could steal the show from trueEx which is why trueEx strategists are listing its contracts in the next three serial months and quarterly maturity to avoid clashing with Bakkt.
Recently trueEX has been spicing up the trading platform for its affiliate trueDigital with new offerings. Three months ago trueEx listed Bitcoin and Ethereum (ETH-USD) in its offerings.
TrueEX is optimistic that there is still a large market yet to be explored with the existing digital assets offerings. The firm is looking into ways to accommodate among others retail investors, executive brokers, sovereign wealth funds and financial institutions.