Swap Market Legend to Launch BTC and ETH-Based Derivatives
TrueEX wants to create crypto-related derivative products via its division called TrueDigital. The company is now focusing on derivatives related to Ether and Bitcoin.
TrueDigital, a subsidiary of credit-default swaps firm TrueEX, plans to launch new derivative products based on Ether and Bitcoin. In light of this, the startup made some important steps. First, it announced the partnership with blockchain firm ConsenSys to build a reference rate for Ethereum’s token. Secondly, TrueDigital said it has filed with the US Commodity Futures Trading Commission (CFTC) for approval of its non-deliverable forwards (NDFs) on BTC.
The partnership with ConsenSys
TrueDigital and ConsenSys announced on Monday that they would come with a reference rate for Ether, which is indispensable for the upcoming Ether-based derivative products. ConsenSys will help the exchange create the needed infrastructure for broader adoption of cryptocurrency trading products aimed at institutional investors.
Sunil Hirani, founder and CEO of TrueDigital exchange, commented on the deal:
"Institutional investors and commercial partners are ready for a regulated and liquid marketplace to gain exposure to and hedge these increasingly important digital currencies and commodities, but the marketplace is sorely lacking the necessary foundation, infrastructure and platforms that institutional investors have come to expect in other important markets.”
He revealed that the ETH reference rate would be built by a group of up to 12 market-making companies. Elsewhere, Cboe and CME, which provide BTC derivative products, use the prices supplied by popular crypto exchanges.
Currently, ConsenSys is also a partner of Microsoft, P&G, and Smart Dubai initiative.
TrueEX wants to NDFs linked to Bitcoin quotations. Investors are used to such contracts in the Forex market. NDFs allow two entities to agree to pay each other at a future date an amount derived from the value of two currencies, like USD or EUR.
TrueDigital’s Bitcoin-related NDFs will be cash-settled, just like CME and Cboe futures contracts are.
Hirani has a solid experience as an entrepreneur. He co-founded Creditex back in 1999, which was one of the first exchanges for credit-default swaps. In 2008, Creditex was acquired by Intercontinental Exchange (ICE), the operator of the New York Stock Exchange (NYSE), for $513 million.