Seed CX is a cryptocurrency derivatives platform. Now with the help of its subsidiary Zero Hash, the company plans to offer bilateral crypto derivatives transactions. That way, Seed CX aims to attract financial institutions to settle derivatives on their platform.
The company announced that initially, it will support back-office settlement functions for Bitcoin forwards. Later, the firm plans to add support for options as well, but the approximate time frame wasn’t specified.
As the company describes in their press release, Bitcoin forwards will include “the calculation of variation margin, initial margin and final settlement values, the sending of margin-call notifications and the movement of funds, significantly reducing operational and counter-party risk,” says Zero Hash.
The company believes that the derivates market as such is gradually increasing in demand, specifically in the U.S. That is why they have come up with a relatively new service – the company will allow institutions to customize the settlement of forwards contracts. That means that investors will have the chance to decide the frequency of calculations, for example, to increase flexibility.
“We’re excited to service that demand with the launch of this new functionality. Zero Hash can now enable any trading platform or set of participants to trade and settle forwards in an efficient and secure manner,” commented Zero Hash president Brian Liston.
Moreover, it has to be noted that these Bitcoin Forwards are physically settled, similar to Bakkt new Bitcoin Futures platform which will soon launch this month. Last year, Seed CX revealed its intention to build such a service, and now, after more than a year, the company finally can go live with their new service.
Earlier this year, in January 2019, Seed CX launched a spot Bitcoin trading market and began tests for margin swaps product last month. However, the company now is entering a market with very tough competitors. For example, LedgerX, ErisX, and the already mentioned Bakkt, also are eying to launch physically-settled Bitcoin products, but only Bakkt has set an official launch date after various delays.
Seed CX, through its subsidiaries, offers an institutional digital asset exchange for spot trading, and plans to offer a separate market for CFTC-regulated derivatives overlaying digital assets. Seed CX and its subsidiaries hold the following licenses: Swap Execution Facility (CFTC), Introducing Broker (NFA), Money Services Business (FinCEN), and Money Transmitter (two dozen states, including Delaware, Illinois and Connecticut), and it has a pending BitLicense with NYDFS.
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