TeraExchange® announced that it has exclusively partnered with BitGo®, the leading bitcoin security platform, to provide multi-signature blockchain based custodial services for USD/Bitcoin swaps executed on its swap execution facility. By partnering with BitGo, TeraExchange is the only player in the industry to provide its market participants with the ability to collateralize bitcoin derivative trades in a completely secure and auditable trading environment.
The TeraExchange institutional trading platform will use Bitcoin’s cryptographic ledger system – known as the blockchain – combined with BitGo’s revolutionary multi-sig security platform to replace the physical third-party custodianship model required of traditional collateral depositaries. “The relationship with BitGo fills in the missing piece of the Bitcoin derivatives trading workflow,” said Leonard Nuara, President and co-founder of TeraExchange. “Participants can now trade with the confidence of knowing that the required collateral is in place which serves to create a safe and sound marketplace.”
In September, TeraExchange, a swap execution facility certified with the Commodity Futures Trading Commission (“CFTC”) the first regulated platform for bitcoin derivatives and a spot bitcoin price index. Trading of USD/Bitcoin swaps is subject to the rules and regulations of TeraExchange and the CFTC. TeraExchange also operates the Tera Bitcoin Price Index (“TeraBit”), which employs a dynamic algorithm that compiles and filters data on a real-time basis from a number of widely utilized global bitcoin exchanges.
Participants on TeraExchange maintain a BitGo Enterprise™ account and establish a multi-sig, custodial wallet. BitGo’s platform ensures that deposited bitcoins as collateral for the USD/Bitcoin swaps are securely held on the blockchain and transactions sent from the enterprise wallet require BitGo’s multi-signature approval process. This approach establishes auditable bitcoin collateral, creating a complete electronic trading lifecycle for bitcoin derivatives trading.
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“TeraExchange has proven to be a key player in the bitcoin derivatives market with the launch of their regulated platform last month,” said Will O’Brien, CEO and co-founder of BitGo. “We are excited to be at the forefront of this fundamental shift in how the blockchain with BitGo multi-sig wallets are used to safely hold collateral for these types of swaps.”
“The combination of TeraExchange and BitGo is very powerful,” said Gregory Simon, CFO and co-founder of Ribbit.me, who created RibbitRewards, the world’s first rewards program built using blockchain technology. “The TeraExchange marketplace enables us to hedge our BTC price volatility risk, and BitGo’s service gives me the peace of mind that my company’s bitcoins are stored on the blockchain with the industry’s best security technology and standards.”
As of this announcement, TeraExchange and BitGo have enrolled the first market participants, including DigitalBTC and Ribbit.me, among others.