Crypto Facilities, a Kraken subsidiary, has secured crypto derivative MTF license granted by the United Kingdom’s Financial Conduct Authority. It is the only entity to secure a Multilateral Trading Facility (MTF) license giving it a monopoly with regards to the institutional crypto derivatives trading market.
📣 *ANNOUNCEMENT* @KrakenFutures becomes the first licensed crypto futures venue in Europe
— Kraken Exchange (@krakenfx) July 6, 2020
Regulations state that institutional investors must take part in crypto derivative activities only through regulated venues. Crypto Facilities is the only player to offer such products right now, giving it a momentary monopoly until another entity enters the scene. Parent group Kraken is sure to reap benefits.
Kraken’s acquisition is set to take off
Institutional crypto trading is Europe is just taking off. The famed crypto derivative MTF license is the sole gateway to this market. In 2019, Kraken’s acquisition of Crypto Facilities was announced. In the year since the company has invested significantly in both operations and features.
Kraken acquires Crypto Facilities, positioning itself as the world’s first crypto spot and futures exchange! https://t.co/W4Xr1XNPpQ
— Kraken Exchange (@krakenfx) February 4, 2019
Today, it offers plenty of offerings, including crypto derivatives, with up to 50X leverage. However, the present setup is limited to only retail and individual traders. After securing a first-ever crypto derivative MTF license, the Kraken subsidiary is ready to tap into the massive institutional European market.
Being the sole regulated venue, it would undoubtedly appeal to the institutional investors. However, derivatives usually have no impact on the underlying security’s price since they are primarily settled in cash. So, the pricing would be nominal, to say the least. However, until some other company secures a crypto derivative MTF license, Crypto Facilities would be wearing the crown.
Crypto derivative MTF license is no less than Kryptonite
Kraken’s chief operating officer, Jesse Powell, explains that the MTF license would help the institutional investors take part in the vibrant crypto derivatives ecosystem. He says that present regulations restrict these large players to regulated venues under MTF.
Securing a crypto derivative MTF license is no easy feat. The Financial Conduct Authority mandates that any company applying to secure an MTF license must meet 60 stringent requirements to operate in the UK. These include transparent rules, processes, appropriate trading systems, meeting market agreements, control and safety mechanisms, and more. Not many firms bother to apply due to these strict norms, which makes Crypto Facilities stand out.