Bitcoin, the much-debated “virtual currency,” has passed a milestone on the road to more widespread financial-world acceptability with the first Bitcoin derivative transaction executed on a regulated exchange.
The transaction has been completed via TeraExchange, the newly regulated exchange, which launched as a swap execution facility (SEF) in October 2013 and completed the CFTC’s self-certification process in September 2014, officials say.
The initial trade was completed between publicly traded digitalBTC and a hedging counterparty, according to officials at TeraExchange, which also points out that all of its U.S. dollar/bitcoin swaps are now subject to the rules and regulations of TeraExchange and the CFTC.
“There is significant, growing demand for a hedging instrument like this,” Christian Martin, CEO and co-founder of TeraExchange, says in a statement. “Not only does the swap provide a much-needed risk management tool but it instills confidence and credibility to the entire Bitcoin community at a vital time in the market’s development.”
That “vital time in the market’s development” may be a reference to both the high expectations and public concerns the nascent bitcoin market has attracted in recent months. Those concerns include the collapse of one early exchange in Tokyo, a legal case alleging bitcoin-mediated money laundering involving the Silk Road “dark web” portal, and the possibly work-related suicide of a Singapore-based bitcoin currency executive, the young CEO of a start-up.
“Like TeraExchange, digitalBTC is no stranger to regulation since stock exchange listing requirements mandate complete transparency into our business activities and financial reporting,” says Bill Brindise, chief investment officer at digitalBTC, which characterizes itself as a publicly traded company (on ASX, the Australian exchange) “providing investors exposure to multiple facets of the Bitcoin industry and other digital currencies.”
TeraExchange’s acceptance of CFTC rules may go a long way toward assuaging concerns regarding the virtual currency. While TeraExchange is now regulated, a longer process exists that leads to CFTC “approval,” according to a TeraExchange spokesperson.
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