Bitnomial secures clearinghouse license from CFTC as market awaits Bitcoin ETFs

Rick Steves

“Our aim is to introduce a global derivative trading platform, regulated in the US, that marks a pivotal shift from traditional USD and Treasury margin collateral to incorporating digital assets as collateral as well. This change is intended not just for crypto trading but also for a broad spectrum of physical and digital commodities.”

Bitnomial, a U.S.-regulated digital asset derivatives exchange, has achieved a significant milestone by obtaining a U.S. clearinghouse license to clear margined digital asset futures and options trades.

This development positions Bitnomial as the first and only crypto-native exchange to hold a full suite of U.S. derivatives exchange, clearinghouse, and broker licenses.

Unique in the U.S. market, Bitnomial now offers margined, physically delivered digital asset derivatives, allowing customers actual ownership of digital assets on a leveraged basis, rather than just cash settlements.

Bitnomial is CFTC-regulated for clearinghouse, exchange, and brokerage services

The Commodity Futures Trading Commission (CFTC) approved the clearinghouse license (DCO) by a vote of four to one at its December Open Meeting. This license completes Bitnomial’s impressive array of licenses, which already includes an exchange license (DCM) and a brokerage license (FCM). This full set of licenses enables Bitnomial to comprehensively serve the needs of digital asset traders, brokers, and dealers under the strict federal oversight of the CFTC.

The recent rise in Bitcoin’s price and the prospect of a spot Bitcoin ETF in the U.S. indicate growing institutional interest in physical digital asset exposure within a strong regulatory framework. Bitnomial’s new capabilities in physical Bitcoin derivatives trading are expected to play a crucial role in this landscape, facilitating inventory management and diverse trading strategies for Bitcoin.

Bitnomial’s current investors, including Electric Capital, Franklin Templeton, and Coinbase Ventures, reflect a strong belief in the potential of a fully CFTC regulated digital asset derivatives venue. This diverse investor base combines traditional finance with crypto-native perspectives.

“Our FCM offers support to our brokerage partners, institutions, and dealers”

Luke Hoersten, Founder and CEO of Bitnomial, envisions a global derivative trading platform regulated in the U.S. that transitions from traditional USD and Treasury margin collateral to include digital assets as collateral. Bitnomial, which has been offering margin digital asset trading since late 2020, plans to broaden its product offerings and customer base now that the licensing process is complete. The firm’s FCM focuses on wholesale digital asset-related services and support to brokerage partners, institutions, and dealers.

“Our aim is to introduce a global derivative trading platform, regulated in the US, that marks a pivotal shift from traditional USD and Treasury margin collateral to incorporating digital assets as collateral as well. This change is intended not just for crypto trading but also for a broad spectrum of physical and digital commodities. While Bitnomial Exchange has been live with margin digital asset trading since late 2020, we’ve been quiet about our broader strategy while working behind the scenes to prepare for our larger business deployment. Our incremental improvements to the platform and operations have been in anticipation of obtaining these additional licenses, enabling us to offer a fully regulated digital asset derivatives exchange and clearinghouse with margin trading. Unlike other businesses that have attempted to disintermediate the brokerage industry, our FCM offers wholesale digital asset-related services and support to our brokerage partners, institutions, and dealers. Now that the licensing process is complete, we can shift our focus to expanding Bitnomial’s product offering and customer base.”

“We would like to thank CFTC Chairman Behnam, the Commissioners, and especially CFTC DCR staff for their coordination and hard work throughout the licensing process. The CFTC is vital to the growth of the digital asset industry globally and we look forward to continuing our collaboration as we build a safe, transparent, and innovative digital asset derivatives market in the US.”

R.J. O’Brien and Franklin Templeton are on board

John O’Brien, Jr., Board Member of R.J. O’Brien & Associates and CEO of O’Brien Investment Group, highlighted the need for physical Bitcoin derivatives to hedge against US dollar risk. “Recent events highlight the need to hedge bitcoin against US dollar risk physically. We support diversification and responsible innovation in the derivatives clearing industry and are excited to see a new technology-driven margined clearinghouse be approved by the CFTC.”

Kevin Farrelly, Managing Principal at Franklin Templeton, commended Bitnomial for its innovative approach and commitment to federal regulation in the evolving asset class. “Bitnomial is the rare breed of crypto-native firm that executed on its plan to drive rapid innovation in crypto derivatives while responsibly pursing federal regulation in a new asset class. The financial support for this type of leadership and ethical business execution is diverse as seen in the investor base. This is the reason you see one of the largest asset managers in the world, Franklin Templeton, founded in 1947 investing in the same company as a cutting-edge venture fund like Electric Capital founded in 2018.”

Bitnomial, Inc. develops and operates exchange, clearing, and settlement infrastructure for the digital asset market. Its subsidiaries are registered with the CFTC as a Designated Contract Market (DCM), Futures Commission Merchant (FCM), and Derivatives Clearing Organization (DCO), solidifying its standing in the digital asset derivatives market.

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