Derivatives marketplace TeraExchange has announced it has fulfilled the first ever Bitcoin derivatives trade on a regulated exchange.
The trade, in the form of TeraExchange’s USD/BTC swap service, was made between digitalBTC and a hedging counterparty. digitalBTC is itself he world’s first Bitcoin-focused company to commence trading on a major stock exchange.
“There is significant, growing demand for a hedging instrument like this,” said Christian Martin, CEO and co-founder of TeraExchange in a press release issued Thursday. “Not only does the swap provide a much-needed risk management tool but it instills confidence and credibility to the entire Bitcoin community at a vital time in the market’s development.”
The landmark event follows the culmination of TeraExchange’s self-certification procedure which it says will “ensure that the swap and the Tera Bitcoin Price Index satisfied the rules and regulations of the federal regulator.” The company worked closely with the US Commodity Futures Trading Commission (CFTC) over a six-month period in order to finalize its position.
“After months of refining the swap and the index we are excited that bitcoin derivatives trading has commenced on our platform,” TeraExchange president and co-founder Leonard T. Nuara commented.
Trading on TeraExchange itself is facilitated by liquidity providers including digitalBTC whose CIO Bill Brindise was quick to point out the value of the partnership.
“We are delighted to be working closely with TeraExchange and are excited they have created a regulated platform for institutional traders,” he said, adding:
“This swap is an important investment vehicle that has been sorely needed by Bitcoin investors, retailers and miners. Like TeraExchange, digitalBTC is no stranger to regulation since stock exchange listing requirements mandate complete transparency into our business activities and financial reporting.”
At the heart of TeraExchange is its Tera Bitcoin Price Index, which is used as the settlement rate for its swaps. The index uses a dynamic algorithm that compiles and filters data in real time from a number of Bitcoin exchanges. “In order to be included in the Index these exchanges are required to execute and maintain an information sharing agreement with TeraExchange, as required by the CFTC,” the press release states.
Additionally, both TeraExchange and digitalBTC took part at the CFTC Global Markets Advisory Committee meeting held on Oct 9.