A former Merrill Lynch quant has said his crypto-currency start-up is close to receiving regulatory approval to launch a Europe-based bitcoin future and options, a possible breakthrough for the nascent European market.
Wiktor Gromniak, co-founder and CEO of Quedex Limited, said his firm is confident of shortly receiving regulatory approval from the Finance Ministry of Gibraltar, an emerging crypto-currency regulatory specialist, to launch a full service crypto-exchange.
Gromniak said: “We are in the final stages of getting our license and have been making very good progress since submitting in March and I am confident that it will be granted very soon.”
Quedex has applied to launch an exchange that enables firms to trade bitcoin-denominated standardised futures and European vanilla options with bitcoin (BTC) as the home currency and US dollars (USD) as the underlying.
The Quedex chief executive, a former crypto-currency trader himself, said his firm has been tracking crypto-currency developments for years and took the decision to apply to launch a regulated exchange to allay growing crypto concerns from institutional clients.
He told Global Investor: “Essentially, we were faced with the decision to go down the unregulated route or explore some of the opportunities arising from the emerging Distributed Ledger Technology (DLT) and crypto regulation – effectively to take crypto out of a grey area and into a more transparent environment.”
The Quedex chief executive admits the reputation of crypto-currency markets has been damaged by hacking scandals and a general lack of transparency which have spooked institutional firms that might otherwise have been keen to trade these products.
“These issues need to be addressed if the market is going to attract big institutional clients. This is why we feel being regulated is so important and we are seeing more and more interest from institutional players with potential customers coming to us discussing opportunities for partnerships.”
Regulatory approval from the Finance Ministry of Gibraltar will pave the way to Quedex’s full launch though the platform has been live for beta testing since December “to show customers and regulators that the market works”.
Gromniak added: “We have a couple of market-makers on the platform and others are in the process of onboarding and integrating. Currently, we are talking to experienced retail players and institutional clients about exploring these opportunities. We have also talked with prop shops and hedge funds in the UK, Asia and the Netherlands.”
US derivatives giants the CME Group and Cboe Global Markets launched late last year their bitcoin futures markets but Gromniak sees them a fundamentally different propositions.
He said: “We don’t see CME and Cboe as competitors. They are doing the reverse of us in that they are fiat-centric exchanges aimed largely at speculators and we are a crypto-centric exchange that is offering derivatives, both futures and vanilla options.”
Gromniak concluded: “The reverse element lies in the fact that we have BTC as home "currency" and USD as underlying and they have USD as home currency and BTC as underlying.”