A Bitcoin derivative is under development by wall street engineers. Specifically, SFOX sees NDFs as a vehicle towards the expansion of crypto-related trading, through which the daily trading volume could potentially reach $100 million a day, according to SFOX.
The Development Process
A group of engineers and traders of crypto prime brokerage ‘SFOX‘ are working on a way to expand and increase access to Bitcoin for banks and big investors via 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 trade of Bitcoin derivatives.
The main goal here is to utilize NDFs, which are non-deliverable forward contracts typically used in currency markets, to provide banks with the wherewithal to expose clients to Bitcoin on a larger scale at a contract agreed-upon price, all of which will be settled in cash.
On the Flipside
- Banks have been wary of buying or trading Bitcoin due to concerns surrounding compliance, Know-Your-Customer (KYC) rules, and market liquidity.
Why You Should Care
SFOX effectively has more than 120 institutional clients, allowing it to expand liquidity to a market for NDFs. This could contribute to generating additional interest in Bitcoin investments and bring the token’s value forward after its recent bearish turn.