Gibraltar has teamed up with exchange Bullish to introduce a regulated framework for crypto derivatives clearing, aiming to separate trading and settlement functions.
Cryptocurrency exchange Bullish, backed by Peter Thiel, has partnered with the Government of Gibraltar and the Gibraltar Financial Services Commission to create the regulatory framework for clearing and settling crypto derivative contracts.
In a Tuesday press release, the exchange said it wants to bring the same level of risk management and oversight seen in traditional markets to the crypto space as there is currently “no regulation that specifically addresses the clearing needs of the crypto industry,” pointed out Tom Farley, CEO of Bullish.
“While Central Counterparties have become more robust in other asset classes, this initiative will bring that same robust risk management and regulatory oversight to the crypto clearing space that EMIR & Dodd-Frank brought to traditional derivatives markets.”
Tom Farley
The framework could allow certain cryptocurrencies to be used as collateral and settlement currency, though the press release doesn’t list which ones. It also expands which institutions can hold collateral, which Bullish says will boost market participation and trust.
The new model introduces a regulated clearing house that is separate from the exchange itself in an effort to increase transparency and reduce risks for market participants.
Nigel Feetham KC MP, Minister for Financial Service, said Gibraltar is “renowned for pioneering clear regulation” and embracing forward-looking technology, being the “first jurisdiction globally to introduce legislation for firms using distributed ledger technology.” Bullish also plans to launch its clearing services and introduce options trading later this year, but hasn’t yet shared a specific timeline.
Brendan Blumer’s Block.one launched Bullish in 2021, backing the exchange with $10 billion in funding. Its capital includes both cash and crypto, starting with an initial injection of $100 million, 164,000 BTC, and 20 million EOS. Bullish later raised an additional $300 million through a strategic investment round.
