Institutional investors about to get a chance to trade Ether
America’s first regulated cryptocurrency exchange is developing a benchmark price for Ethereum derivatives.
The first big move toward mainstream Wall Street investments into Ethereum has been made by the only swap exchange so far regulated by the Commodity Futures Trading Commission. The trueEX marketplace is developing a benchmark Ether price for future Ethereum investment products with the help of blockchain developer ConsenSys.
“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 trueDigital Holdings founder Sunil Hirani.
Swaps are a kind of derivative exchange between two financial instruments, most commonly interest rates, commodities and foreign exchange currencies.
While bitcoin and Ethereum have amassed $156 billion and $68 billion of market cap, respectively – per CoinMarketCap, the possibility of greater access to institutional investors offers an opportunity many times larger. In comparison, the gold market currently sits at $8 trillion and Apple had a year-end market cap of $869 billion.
US regulators recognized this substantial opportunity during a Senate hearing that was aired to the public last month and have been working to create the proper legal framework for the growing cryptocurrency industry ever since. Recently the SEC has provided guidance for the unregulated cryptocurrency exchanges that proliferate the Internet and for the booming initial coin offering (ICO) practice.
The intense price volatility of cryptocurrencies and the threat of hacking at unregulated exchanges have been cited as deterrents for institutional investment in the space.
Just as the CBOE’s futures did for bitcoin, trueEX aims to have its Ether benchmark legitimize institutional investment into Ethereum.
Disclosure: At the time of writing, the author holds XRP, CND, ANT and DRGN, and actively trades BTC and ETH.
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