The investment arm of United Kingdom-based pension fund M&G has invested $20 million in the country’s first regulated Bitcoin (BTC) derivatives exchange, Global Futures & Options Holdings (GFO-X).
An announcement from M&G and GFO-X outlined the investment details, which form part of a $30-million Series B funding round for the derivatives exchange. The platform will initially offer clearing of Bitcoin index futures and options contracts.
The move provides a platform for traditional finance institutions to gain exposure to various cryptocurrency derivative investment products. GFO-X is set to become a Financial Conduct Authority (FCA)-regulated and centrally cleared trading platform for crypto derivatives.
The investment capital stems from M&G’s Crossover strategy, which was seeded from a Series B funding round that draws from the $138-billion prudential with profits fund. The crossover strategy is aimed at “patient growth equity” for fast-growing private companies.
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The funding aims to create a hub for trading and clearing cryptocurrency derivatives and foster innovation in the sector. Part of the investment sees M&G join the board of GFO-X.
A statement from M&G portfolio manager Jeremy Punnett highlighted the potential for the U.K. and London to become leading destinations for cryptocurrency technology and investment.
“The lack of regulated trading venues is materially hampering the growth of the digital currency trading market,” Punnett added.
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GFO-X CEO Arnab Sen added that evolving U.K. and European regulations will help cryptocurrencies edge their way into mainstream finance offerings. Still, this eventuality depends on integrating traditional market structures to address perceived risks associated with the emerging asset class.
“However, building a regulated financial market ecosystem is complex, time-consuming and expensive, and the pitfalls of taking shortcuts are now clear for all to see,” Sen said.
“The long-term viability of digital assets and the digitization of real tangible assets requires careful collaboration between traditional market participants and modern innovators.”
As investors continue to show interest in cryptocurrencies, the FCA recently issued additional guidelines to industry service providers to ensure compliance with U.K. crypto asset promotion rules. Some operators have opted to leave the country, while others have endeavored to meet strict requirements to advertise in the United Kingdom.
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