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Capital Markets

Cryptos crash but never die, and funds of funds can profit

Institutions don’t have to believe in any investment case for cryptocurrencies to garner returns from volatility in a growing, active, inefficient market.

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On July 6, the Financial Conduct Authority (FCA), licensed Crypto Facilities, the largest cryptocurrency futures exchange in Europe, as a fully recognized multilateral trading facility (MTF).

The company – which offers a venue for leveraged, cash-settled futures contracts to traders seeking exposure to Bitcoin and other crypto assets without holding or accepting delivery of the underlying – becomes the first crypto exchange to achieve such recognition.

With this new licence, it will be able to serve institutional clients who are mandated to trade only on licensed platforms and to increase its product offering.

London-based Crypto Facilities, which has pioneered cryptocurrency derivatives since 2015, was acquired in February 2019 by US-based Kraken, a leading cash and spot-trading exchange for 30 crypto and seven fiat currencies.

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Jesse Powell,
Kraken

Hinting at the long slog to satisfy the FCA’s requirements, Jesse Powell, chief executive and co-founder of Kraken, says: “We undergo these licensing efforts because Kraken is about making crypto accessible for everyone.

“This particular licence means that a sophisticated class of investors, limited by their own requirements to interface with a regulated venue such as an MTF, will now have access to crypto derivatives in Europe for the first time.




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