Bitcoin derivative is under development by wall street engineers. Specifically, SFOX sees NDFs as a vehicle towards the expansion of crypto-related trading, and daily trading volume could potentially reach $100 million a day, according to SFOX.
The Development Process
A group of engineers and trades at the crypto prime brokerage SFOX are working on a way through which they can expand access to Bitcoin for banks and big investors through a bespoke derivative.
SFOX’s co-founder, George Melika, mentioned that his firm is in talks with large banks as well as market makers, such as Jane Street, towards opening a market that facilitates the trading of Bitcoin derivatives.
The main goal here is to utilize NDFs, which are non-deliverable forward contracts typically used for currency markets, to give banks the wherewithal to expose clients to Bitcoin at a greater scale through a contract agreed-upon price, all of which settles in cash.
On the Flipside
- Banks have been wary of buying or trading Bitcoin due to the concerns surrounding compliance, Know-Your-Customer (KYC) rules, and market liquidity.
Why You Should Care
SFOX essentially has more than 120 institutional clients, which allows it to expand liquidity to a market for NDFs. This could contribute to more interest in Bitcoin investments and bring the token’s value forward after its recent bearish turn.
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