TrueEx plans to launch a regulated derivatives marketplace for digital assets under the trueDigital brand once their application with the U.S Commodity Futures Trading Commission (CFTC) is approved.
The first products planned by TrueEx will be bitcoin-based, but TrueEx also partnered with ConsenSys to develop a target reference price index for Ether.
Delivering confidence and transparency for mainstream investors
As interest in digital currencies rises there is increasing demand for mainstream investment products for tentative investors. TrueEx hopes to deliver the “confidence and transparency” that traditional investors are seeking.
The initial products will be bitcoin-based non-deliverable forwards (NDFs) settled in USD.
NDFs are a type of futures contract which settles the difference between the NDF price and prevailing immediate price for an agreed upon amount of funds – a common practice in FOREX and commodities trading. NDFs are poplar in FOREX trading for those who are seeking to hedge exposure to foreign currencies that are not internationally traded.
Ether is the second largest digital currency by market capitalization, and Ether combined with Bitcoin reach a market capitalization of $430 billion USD (approximately $679 billion CAD).
In the press release by TrueEx issued on March 12th, 2018, TrueEx describes the marketplace as “lacking the regulatory and technology building blocks needed for institutional involvement and participation.”
TrueEx is known for innovation, having won a number of trading awards including OTC Trading Platform of the Year at the Risk Awards. They operate the first Designated Contract Market (DCM) for swaps approved by the CFTC, and report trading volumes of over $9.7 trillion USD.
ED&F Man Capital Markets hopes to be the first futures commission merchant (FCM) to offer brokerage for trueDigital NDFs.
ConsenSys partnership will develop the currently lacking infrastructure
trueDigital Holdings (TDH) will partner with prominent blockchain venture studio ConsenSys to develop the benchmark rate for Ether needed for institutional trading, and the infrastructure required to make the step into mainstream investment products.
“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,” said Sunil Hirani, founder of TDH.
ConsenSys is headquartered in Brooklyn, New York, with offices globally, including in Toronto. The organization was founded by Canadian Joseph Lubin, who also co-developed the Ethereum Foundation. ConsenSys works predominantly on Ethereum blockchain applications and has grown considerably in size and reputation since inception two years ago.
Wall Street trading of Bitcoin futures is still only a few months old. CME group was approved by the CFTC to offer the digital currency futures and trading commenced on December 18th, 2017. Market observers expect Nasdaq to enter the bitcoin futures market sometime in 2018.
With Ether following closely on Bitcoin’s heels and the announcement by TrueEx it’s likely that Ether based mainstream investment products will also hit the financial markets in 2018.