Deribit- Dutch-based cryptocurrency derivatives exchange has teamed-up with Paradigm- US-based institutional messaging service to launch block trading platform for crypto derivatives, according to a Bloomberg report on 22nd August.
Deribit exchange states that the exchange becomes first of its kind to offer high volume trades of cryptocurrencies derivatives such as bitcoin and ether. The new block trading service aims at allowing institutions to directly deal with cryptocurrency derivatives trades through chat on Paradigm platform, while accepted data is automatically sent to the Debribit exchange for settlement and clearing purpose. Debribit exchange consists of an insurance fund, developed basically to cover expenses of bankruptcy issues.
CEO of Deribit Exchange, John Jansen mentioned, the crypto derivatives exchange has determined minimum volume for block trades of 40 Bitcoin and around 800 Ether, or around $400,000 and $150,000, for option contracts joined to those crypto assets. Ten of the leading cryptocurrency trading companies have registered for the new service. However, founder of Paradigm, Anand Gomes revealed only one crypto trading firm name, QCP Capital.
Deribit exchange is an Amsterdam based firm, established in 2016, and the exchange is currently not regulated across the Netherlands because local authorities claim crypto derivatives as ‘cash-settled contracts,’ BNN Bloomberg mentions.
By launching the new platform, both the partners intend to remove execution risk relating to the order book, especially when institutional investors secretly negotiate high trades through Skype or Telegram.
Deribit’s Co-founder and COO, Maris Jansen informed a source,
This solution allows you to negotiate deals privately on Paradigm and have them centrally cleared on Deribit, eliminating execution risks like front running. It’s a crucial step in onboarding institutional traders in the world of crypto.
The block trading solution can be accessed on the Paradigm platform and also on Deribit through the API. However, it’s important to note that Paradigm platform cannot be accessed by the US people and across certain territories.
As per the websites, Paradigm platform provides features that enable over the counter (OTC) investors to automate price negotiation and clearing. By using the messaging service of Paradigm, traders can create the options trades, which are later executed and settled at Deribit exchange. Most of the time, crypto traders use Telegram to perform such activities.
Cryptocurrency derivative interest is significantly increased from the past few months. The much-awaited BTC futures platform of Bakkt recently a received license from the US regulators and also revealed the launch of its new platform on September 23rd, 2019.
While in March, this year, Galaxy Capital backed by Caspian- the institutional trading company introduced crypto trading derivatives by integrating with the platform of Deribit.
On the other hand, in August, soon to introduce cryptocurrency derivatives exchange, Blade raised around $4.3 million through an investment round that included leading crypto firms such as Coinbase.
This new initiative of Deribit is part of a wider effort to build a professional marketplace for digital currency derivatives.