On July 31, 2018, Japanese financial services company SBI Group announced that it plans to create a trading platform for cryptocurrency credit default swaps (CDS), also known as derivatives. The purpose of the platform is to hedge the risk that large crypto investors are interested in, and therefore SBI has made a significant investment in US-based digital marketplace developer Clear Markets.
According to Western media reports, SBI Holdings subsidiary SBI Crypto Investment bought a 12% stake in Clear Markets, a North Carolina-based developer of digital trading platforms. The deal was rumored to be worth more than 1 billion yen ($9 million), although the companies did not publicly announce the price. With this deal, SBI is well positioned to develop the coveted cryptocurrency derivatives trading platform. The company's strategy is to offer derivatives trading to institutional investors, taking advantage of being the first of its kind to make money.
Risk hedging and derivatives
The main advantage that derivatives offer investors is the hedging of risks in the cryptocurrency market, which is known for its high volatility. By using cryptocurrency derivatives like ETFs, investors can actively participate in digital asset trading without exposing themselves to the risks inherent in conventional trading.
With the help of ETFs, investors trade cryptocurrency and withdraw profits into cash, which is a convenient option for those who like quick income, but do not particularly trust this asset class. At the moment, there is a small supply of derivatives on the cryptocurrency market, while everyone is waiting for regulators to make key decisions.
This could be an opportunity for SBI to become a leader in this space by betting that crypto ETFs will soon become a reality. Through a partnership with Clear Markets, the platform will have a smooth and intuitive interface tailored for institutional investors. In March 2018, the company also announced an investment in CoolBitX, a cryptocurrency hardware wallet venture. Earlier in July 2018, SBI Group acquired a stake in the Canadian energy company Lancium Technologies, which is engaged in cryptocurrency mining.
According to btcmanager.com
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