Two London-based firms, Crypto Facilities and Elliptic, have joined forces to provide a settlement and clearing mechanism to separate bitcoin custody from other exchange functions. The settlement and clearing mechanism marks another step in bringing bitcoin to capital markets. Crypto Facilities is a bitcoin derivative exchange while Elliptic is a bitcoin analytics and security firm.
Crypto Facilities will host client accounts in Elliptic’s secure, KPMG-accredited vaults. Under this arrangement, Crypto Facilities accounts are fully insured by an A-rated, Fortune 100 underwriter. Each client will own their own segregated, ring-fenced account that is settled daily on the block chain. The client can see all movement in the account as the block chain independently verifies all activity.
The solution, which the firms herald as an industry first, overcomes the traditional setup of bitcoin trading venues in which client assets are managed directly by the exchange and cannot be audited externally.
“Capital markets would never entertain the idea of having an exchange hold assets or of pooling funds together,” said Jean-Christophe Laruelle, COO of Crypto Facilities.
The history of high-profile hacks has demonstrated that this is not a solution for the bitcoin space either. With Elliptic, we have found the ideal partner to define a whole new benchmark for bitcoin clearing and custody.
“Our mission is to bring confidence and certainty to bitcoin. This deep integration of our two firms is an essential step towards enterprise-scale bitcoin trading,” said James Smith, CEO of Elliptic. “With Crypto Facilities’ strong and robust trading infrastructure, we expect trade in bitcoin derivatives will flourish, improving bitcoin’s price stability and driving enterprise adoption.”
Crypto Facilities launched earlier this year. The new solution is available immediately and comes with a complete re-launch of Crypto Facilities’ trading interface.
“This is a watershed moment for bitcoin trading.” said Timo Schlaefer, Crypto Facilities CEO. “Experienced market participants will immediately recognize that we have done away with one of the biggest risk factors in the bitcoin ecosystem.”
Crypto Facilities provides risk management and trading solutions around digital assets such as bitcoin. The firm is also a broker for exchange-traded futures and options.
Elliptic provides bitcoin analytics and security services. The company is backed by Octopus Ventures and is the founding member of the U.K. Digital Currency Association (UKDCA).
Featured image from Shutterstock.