This Rare Complete Set of CFTC Licenses Allows Bitnomial to Offer Margined Physically Delivered Digital Asset Futures and Options
Bitnomial, a US-regulated digital asset derivatives exchange, was granted a US clearinghouse license to clear margined digital asset futures and options trades, making it the first and only crypto-native exchange with a full set of US derivatives exchange, clearinghouse, and broker licenses. Moreover, Bitnomial is the only US exchange with margined, physically delivered digital asset derivatives, meaning customers can receive actual ownership of digital assets on a leveraged basis rather than just a cash payout at settlement.
The license was approved by four to one vote at the CFTC December Open Meeting today.
This clearinghouse license (DCO) completes Bitnomial’s set of licenses, a rare achievement that already includes an exchange license (DCM) and a brokerage license (FCM), allowing Bitnomial to cater to the unique needs of digital asset traders, brokers, and dealers across the entire derivatives industry, all under the federal oversight of the US Commodity Futures Trading Commission (CFTC).
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“Our aim is to introduce a global derivative trading platform, regulated in the US, that marks a pivotal shift from traditional USD and Treasury margin collateral to incorporating digital assets as collateral as well. This change is intended not just for crypto trading but also for a broad spectrum of physical and digital commodities,” said Luke Hoersten, Founder and CEO of Bitnomial. “While Bitnomial Exchange has been live with margin digital asset trading since late 2020, we’ve been quiet about our broader strategy while working behind the scenes to prepare for our larger business deployment. Our incremental improvements to the platform and operations have been in anticipation of obtaining these additional licenses, enabling us to offer a fully regulated digital asset derivatives exchange and clearinghouse with margin trading. Unlike other businesses that have attempted to disintermediate the brokerage industry, our FCM offers wholesale digital asset-related services and support to our brokerage partners, institutions, and dealers. Now that the licensing process is complete, we can shift our focus to expanding Bitnomial’s product offering and customer base.”
Bitnomial’s current investors include Electric Capital, Franklin Templeton, Belvedere Strategic Capital, Jump Trading, DV Chain, Consolidated Trading, RRE Ventures, Collab+Currency, O’Brien Investment Group, and Coinbase Ventures. This diverse group of investors demonstrates support for a fully CFTC regulated digital asset derivatives venue from both traditional finance and crypto-native investors.
“Recent events highlight the need to hedge bitcoin against US dollar risk physically,” said John O’Brien, Jr., Board Member of R.J. O’Brien & Associates and CEO of O’Brien Investment Group. “We support diversification and responsible innovation in the derivatives clearing industry and are excited to see a new technology-driven margined clearinghouse be approved by the CFTC.”
Kevin Farrelly, Managing Principal at Franklin Templeton, added, “Bitnomial is the rare breed of crypto-native firm that executed on its plan to drive rapid innovation in crypto derivatives while responsibly pursing federal regulation in a new asset class. The financial support for this type of leadership and ethical business execution is diverse as seen in the investor base. This is the reason you see one of the largest asset managers in the world, Franklin Templeton, founded in 1947 investing in the same company as a cutting-edge venture fund like Electric Capital founded in 2018.”
The recent rise in Bitcoin’s price and the anticipation of a spot Bitcoin ETF reflects a growing institutional interest in the US as a hub for physical digital asset exposure, supported by a strong US regulatory framework. This evolution will boost demand for physical Bitcoin derivatives trading, as the spot ETF provides direct Bitcoin price exposure, encouraging the growth of derivatives as tools for bitcoin inventory management and diverse trading strategies within a regulated environment.
Hoersten concluded, “We would like to thank CFTC Chairman Behnam, the Commissioners, and especially CFTC DCR staff for their coordination and hard work throughout the licensing process. The CFTC is vital to the growth of the digital asset industry globally and we look forward to continuing our collaboration as we build a safe, transparent, and innovative digital asset derivatives market in the US.”
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