Digital assets prime brokerage FalconX is taking the lead in releasing the only crypto derivatives offered by a Commodity Futures Trading Commission (CFTC)-regulated swaps dealer.
This was made possible through its partnership with UK-based crypto index provider CF Benchmarks.
The partnership will open access to regulated crypto derivative markets. This would be via swaps, options and non-deliverable forwards (NDFs) that settle to single asset reference rates.
The contracts would do the job of providing exposure to Bitcoin settled against the CME CF Bitcoin Reference Rate, and to Ether settled against the CME CF Ether-Dollar Reference Rate.
Clients can also gain exposure to other leading cryptocurrencies as FalconX is offering a range of other derivatives products. These will be settled against regulated CF Benchmarks single asset reference rates.
In a statement, the CEO of CF Benchmarks, Sui Chung, said: “Derivatives benchmarked against resilient and regulated indices are the primary route institutions take to gain exposure to the crypto asset class. We are delighted that FalconX will provide exposure to a host of digital assets through our market-leading benchmarks, including the CME CF BRR. This will encourage further activity in the fastest-growing area of institutional finance today.”
The collaboration would help institutional investors in confidently gaining exposure to cryptocurrencies as they will be backed by a regulated and reliable infrastructure. CF Benchmarks’ indices, which have settled the regulated crypto derivatives contracts from CME since launch in 2017, will enable clients to efficiently manage risk involved.
The two entities called the tie-up “instrumental in shaping the trajectory of the industry, ultimately spurring further advancements in technology, regulation, and product offerings”.
Chief product officer of FalconX, Baris Cetinok, commented on the same saying: “Regulated derivatives are critical instruments for institutional investors to safely access digital assets. We are proud to be able to deliver the industry’s best in class regulated derivatives offering – purpose built for the world’s leading institutional investors.”
FalconX tags itself as the “largest, most reliable prime brokerage for the world’s leading institutions”. It allows its users to manage their crypto strategies through a single interface and seamless workflows.
Providing a comprehensive access to the deepest global digital asset liquidity, the company is backed by investors including Accel, Adams Street Partners, Altimeter Capital, American Express Ventures, B Capital and many more.
CF Benchmarks, on the other hand, boasts having over 100 indices underpinned by the “most rigorous methodologies and market scrutiny”. It is also the world’s first digital asset index provider that is authorised and regulated by the UK Financial Conduct Authority (FCA). It is a registered Benchmark Administrator (FRN 847100) under the UK Benchmarks Regulation (UK BMR).
The CF benchmark indices are composed of market data from six constituent exchanges and provided through public methodologies and transparent governance, for tracking, valuing and settling risk in cryptocurrency products and services. These are also used by major asset managers such as BlackRock, Evolve ETFs and Hashdex, to benchmark and value regulated investment funds.