Crypto derivatives platform Seed CX is launching support settlement services for bilateral crypto derivative transactions.
Specifically, Seed CX subsidiary Zero Hash – the company's custodian and settlement service provider – will now support derivatives transactions, the firm announced Wednesday, opening the door for institutions to settle derivatives on its platform.
According to a press release, Zero Hash will support back-office settlement functions for bitcoin forwards contracts initially, but will add support for options at a future date.
This support for 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 counterparty risk," according to Zero Hash.
Additionally, the service will allow institutions to customize the settlement of forwards contracts – for example, deciding the frequency of calculations – to provide "greater flexibility" for investors.
Zero Hash president Brian Liston noted that derivatives are increasingly in demand in the U.S., adding:
Two of Seed CX's subsidiaries, Zero Hash and Seed Digital Commodities Market, have been granted New York's coveted BitLicense as well.
The company faces stiff competition, however: Tassat (formerly trueDigital) also intends to offer bitcoin forwards, while LedgerX, ErisX (backed by TD Ameritrade) and Bakkt (a new subsidiary of the Intercontinental exchange) are all looking to launch physically-settled bitcoin futures contracts.
Of these, only Bakkt has a firm launch date set, for later this month.
Like Seed CX, Bakkt intends to offer margin on its bitcoin derivatives products, announcing Tuesday that customers would have to make an initial deposit of $3,900 (for hedging) or $4,290 (for speculating) to open a position.
Seed CX co-founder Edward Woodford (right) image via CoinDesk archives
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.