Peter Thiel-backed cryptocurrency exchange Bullish has teamed up with the Government of Gibraltar and the Gibraltar Financial Services Commission (GFSC) to develop a comprehensive regulatory framework for clearing and settling crypto derivatives contracts.
This collaboration aims to enhance the stability and transparency of crypto markets by ensuring that crypto derivative transactions are conducted in a secure and compliant environment.
What Will The Agreement Include?
Under the new framework, Bullish and Gibraltar will work to separate trading and settlement functions, addressing concerns around market integrity and risk management.
This initiative is particularly important as the demand for crypto derivatives continues to rise, with institutional investors showing increasing interest in trading digital assets with more sophisticated financial instruments.
The partnership also reflects Gibraltar’s commitment to being a leader in the global regulation of cryptocurrencies.
Gibraltar Continues to Lead with Progressive Crypto and Blockchain Regulations
The jurisdiction has long been a pioneer in creating progressive regulatory approaches to crypto and blockchain, fostering an environment that encourages innovation while ensuring compliance with international standards.
By developing a clear regulatory structure for crypto derivatives, Bullish and Gibraltar aim to improve investor confidence and contribute to the broader acceptance of digital assets in traditional financial markets.
This move is expected to set a new standard for crypto derivatives, offering a model for other jurisdictions to follow.
“There is currently no regulation that specifically addresses the clearing needs of the crypto industry. We aim to change that by introducing a framework that manages risk for virtual asset trading and is aligned with traditional market infrastructure standards,” said Tom Farley, Bullish Group CEO.
He added, “While Central Counterparties have become more robust in other asset classes, this initiative will bring that same robust risk management and regulatory oversight to the crypto clearing space that EMIR & Dodd-Frank brought to traditional derivatives markets. We welcome the announcement from the government of Gibraltar and look forward to introducing our joint proposal to the market.”
Bullish and Gibraltar’s New Framework May Allow Crypto as Collateral for Derivatives Contracts
The new framework developed by Bullish and Gibraltar could enable certain cryptocurrencies to be used as collateral and settlement currency for derivatives contracts, though the specific cryptocurrencies have not been disclosed.
This flexibility is designed to enhance the liquidity and functionality of crypto derivatives markets. Additionally, the framework broadens the types of institutions eligible to hold collateral, which is expected to increase market participation.
By allowing more institutions to be involved, Bullish aims to foster greater trust in the market. This move could attract more investors, particularly institutional players, who may feel more confident in a regulated and diversified collateral framework.
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