The Seed CX Bitcoin Exchange launched its own Bitcoin derivative on August 13th. how The block The US company intends to offer the US bitcoin margin exchanges physically compliant. If everything goes as planned, they could already be available in three months. The financial product is intended for institutional investors.
Margin swaps are over-the-counter derivatives transactions between two parties. These must be respected physically, in the sense that one of the parties must provide the underlying (here in Bitcoin) at the end of the period agreed by contract. The Seed SEF subsidiary, responsible for these derivatives, has already started the test phase. The tests will last all the month of August. If the result is positive, the product could start in the United States, but it has yet to wait for the blessing of regulation.
Edward Woodford, President and Chief Executive Officer of Seed CX, was satisfied that this approval was receivable because over the past 18 months, one of them has been intimately involved in such financial products. Commodity Futures Trading Commission (CFTC):
We are working closely with the CFTC and hope to launch the product publicly in the next three months.
Seed CX wants to complement existing Bitcoin derivatives
Woodford told The Block that Seed CX was the first to offer such bitcoin margin trading in the United States. He explained that such a financial product gives the customer the opportunity to trade Bitcoin from a leverage effect. Accordingly, no similar offer would be offered in the United States to date. Woodford also stated that the margin swaps perfectly matched the Bitcoin derivatives already available due to the expected combination of weekly and monthly contracts.
Maurice Goodman, Risk and Settlement Manager at Seed CX, also commented on the risk measure used:
We will use the value-at-risk model with a 99% confidence level and a 10-day margin period with additional aspects to account for extreme periods of volatility in the value of the underlying contract.
Bitcoin derivatives are on the way
Other Bitcoin derivatives are also on the way to the starting line. Finally, we wish to mention the many long-awaited Bitcoin Futures of Bakkt. Here, we have to wait for it with the start date of this year. Just recently, it even seemed that the LedgerX bitcoins futures would exceed those of Bakkt in the last meters before the start. As is often the case, LedgerX has been thwarted by the authorities. Reports of an existing CFTC approval for the company's Bitcoin futures have proven to be hoaxes.
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