TeraExchange Launches First Regulated Platform for Bitcoin Swaps

Swap execution facility (SEF) TeraExchange has launched the first regulated platform for bitcoin derivatives and a spot bitcoin price index, which will be subject to the rules of the U.S. Commodity Futures Trading Commission (CFTC).

TeraExchanges says that it launched the bitcoin derivative and the Tera Bitcoin Price Index to meet the growing demand of global merchants, payment processors, miners, and hedge funds for an efficient hedging tool, while nstitutional market makers have already offered to provide continuous markets over a range of tenors.

In March 2014, a TeraExchange affiliate structured the first unregulated USD/Bitcoin swap, and for the regulated swap and index, TeraExchange has been working with the CFTC for over six months to ensure they met all requirements.

The price index uses an algorithm that compiles and filters data real-time from several global bitcoin exchanges. In order to be included in the index, these exchanges need an information sharing agreement with TeraExchange, as required by the CFTC.

“Regulated bitcoin swap trading provides institutional clients with a more efficient and confident way to hedge and trade,” says Christian Martin, CEO and co-founder of TeraExchange. “A robust price index also helps the growing bitcoin trading community to accurately mark-to-market positions while establishing trust and stability in this growing global marketplace.”

“The structure of the Bitcoin swap marketplace reflects extensive client input, providing participants the benefits of transparent price discovery and efficient risk transfer,” says Leonard Nuara, president and co-founder of TeraExchange. “Throughout this comprehensive process the CFTC staff has been thoughtful, diligent and thorough in their analysis and review.”