The investment arm of UK-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 advertisement for M&G and GFO-X outlined the details of the investment, which is 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 financial institutions to gain exposure to a variety of cryptocurrency derivatives investment products. GFO-X will become a trading platform for crypto derivatives centrally regulated and authorized by the Financial Conduct Authority (FCA).
The investment capital comes from M&G's Crossover strategy, which emerged from a series B funding round coming from the $138 billion Prudential With Profits fund. The Crossover strategy aims to provide “patient growth capital” to fast-growing private companies.
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The funding aims to create a hub for cryptocurrency derivatives trading and clearing and encourage innovation in the sector. Part of the investment will allow M&G to join GFO-X's board of directors.
A statement from M&G portfolio manager Jeremy Punnett highlighted the potential for the UK and London to become a leading destination for technology and cryptocurrency 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 regulations in the UK and Europe will help cryptocurrencies make their way into mainstream financial offerings. Still, this eventuality depends on the integration of traditional market structures to address the perceived risks associated with the emerging asset class.
“However, building a regulated financial market ecosystem is complex, time-consuming and costly, and the dangers 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 guidance to industry service providers to ensure compliance with UK cryptoasset promotion rules. Some operators have chosen to leave the country, while others have struggled to meet strict requirements to advertise in the UK.
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