Derivatives exchanges are required to receive approval to operate as a Designated Contract Market or a Swap Execution Facility under the U.S. Commodity Exchange Act and CFTC regulations.
According to reports, the Commodity Futures Trading Commission, or CFTC, has given the go-ahead for the US unit of electronic trading platform creator Clear Markets to provide over-the-counter crypto derivatives products with the physical settlement.
SBI Holdings, a stakeholder in Clear Markets, announced on Tuesday that the CFTC has given the go-ahead for its American subsidiary to operate a Swap Execution Facility. It intends to provide derivatives trading for U.S. dollar and Bitcoin (BTC) pairs. Following test transactions on Clear Markets, the financial services company with headquarters in Japan announced that its market maker aimed to increase its trading partners in the United States.
SBI Holdings declared in August 2018 that it had purchased a 12 percent share in Clear Markets and planned to grow that stake in the future. The Japanese company claimed at the time that the investment was intended to build a cryptocurrency derivatives trading platform geared toward institutional investors.
If a derivatives exchange wants to operate in the United States as a Designated Contract Market or a Swap Execution Facility, it must have clearance under the Commodity Exchange Act and relevant CFTC regulations. The Fiscal Year 2023 budget request, which was made public in March, stated that the CFTC was considering extending its jurisdiction over financial products utilizing cryptocurrency.
Three BitMEX co-founders were ordered by a federal court in May to pay $30 million in civil monetary penalties for allegedly breaking the terms of the CFTC. According to reports, major investment firm Goldman Sachs has been considering entering the bitcoin derivatives market via the American division of cryptocurrency exchange FTX.
