Friday, September 12, 2014

First Cryptocurrency (bitcoin) Derivative Launches

Good news for Bitcoin enthusiasts: TeraExchange today launched a swap based on the cryptocurrency.

It is the first financial product based on Bitcoin to receive approval from the Commodity Futures Trading Commision, as Reuters’ Douwe Miedema reports:

The derivative allows clients to protect the value of their bitcoin holdings by locking in a dollar value, offering an insurance against the astronomical price swings that have plagued the computer-generated currency.

“For a merchant to take bitcoin, there wasn’t until this product a regulated way for them to put on a hedge to manage the risk … and now with this product they can,” Christian Martin, who heads TeraExchange, told Reuters.
The launch comes nearly six months after TeraExchange announced plans for the swap this spring. As Miedema writes, “The Tera Bitcoin Price Index was based on information from six different exchanges, the company said, a number it expected to grow. It had agreed with the exchanges to share information if there were suspicious price moves.”

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