With the everyday expansion of the digital assets sector, institutions across the globe have been more interested in the technology. The increasing interest of institutions into the crypto sector and particularly in Bitcoin has also been taken into account by the management of London Stock Exchange Group (LSEG).
According to the official announcement published on Thursday, the LSEG is going to introduce Bitcoin futures and options into its offering. The entity has collaborated with a crypto based firm to execute the process.
In its press release, the LSEG said that it has joined hands with the institutional-grade digital trading venue focused on crypto derivatives, Global Futures and Options (GFO-X). The collaboration is going to facilitate the process of offering Britain’s first regulated trading and clearing in Bitcoin index futures and options derivatives. The announcement stated:
GFO-X is taking the first steps to extracting efficiencies from new technologies within a traditional market structure, with the goal over time of delivering 24/7 trading to global regulated digital asset markets.
Sources reveal that as a part of the project, LSEG’s Paris-based LCH SA clearing unit will introduce DigitalAssetClear, which is a new clearing service for cash-settled Bitcoin index derivatives traded on the partnered platform i.e. GFO-X. This service will be launched in the fourth quarter of this year following the completion of LCH SA regulatory approvals.
Frank Soussan, the Head of LCH DigitalAssetClear, commenting on the growing scope of the crypto space acknowledged the potential it holds. He said that Bitcoin index futures and options has been rapidly growing and there has been an increasing interest among institutional participants who are looking for access within a regulated environment they are familiar with. He added:
The service is a powerful combination of GFO-X’s high-performance technology and optimized contract specifications with LCH’s proven risk management capabilities.
Considering the regulatory scenario for the crypto assets in the United Kingdom, the LCEG’s partnership with GFO-X has been a remarkable step. It has also been licensed by the UK’s Financial Conduct Authority (FCA) which implies increasing trust in the digital asset derivatives ecosystem and bringing crypto one step closer to traditional finance.
In the past weeks, the regulatory environment for crypto assets has been pretty tense in the country. The lawmakers and industry participants warned the government of driving away innovation and losing its potential position as the crypto hub. The regulator has been under intense scrutiny for mass rejection of licenses to crypto firms.
However, in February, the British government launched a public consultation on the future financial services regulatory regime for cryptocurrencies, as well as the risks and opportunities they present, demonstrating its commitment to turning the UK into a global crypto hub. The consultation will close on April 30, 2023. In addition, the lawmakers have also promised a timely and sensible regulation to allow space for safe innovation.
Nonetheless, LSEG is not the only stock exchange that has shown interest in the crypto ecosystem. Prior to this, The Tel-Aviv Stock Exchange (TASE), announced its strategic plan for the years 2023-2027 which was approved by the stock exchange’s board of directors. There were 4 strategic goals listed in the plan and one of them counted in the creation of a platform for digital assets using blockchain (DLT) and venturing into crypto.