TeraExchange finally launched its bitcoin virtual currency, the very first to get an approval from the US federal government. Based on the so-called budding technology, the swap based bitcoin virtual currency is now approved as a financial product. The bitcoin derivative enables clients to protect and to secure their bitcoins as they can lock them in a dollar value. They can also have insurance and protect their bitcoins from abrupt price changes that have haunted the virtual currency.
Price Swings
When the platform was created and launched a few years ago, many have raised their concerns regarding the price swings and also the fact that it is not regulated and it is an open-source platform. Unlike the traditionally money, bitcoin is not controlled by the government or any other organization or agency. But along with the independence that bitcoin offers in the digital world is the concern of some people as to how they are going to treat bitcoins for tax purposes. There were already incidents reported where some individuals lost millions of dollars due to sudden price swings affecting its value.
TeraExhange Gets an Approval
When TeraExchange was finally launched in 2010, the company was able to get an approval from the Commodity Futures Trading Commission. Now, the company is considered one of the few approved platforms that will facilitate that swaps trading. They even had to create an index just to examine the value of the bitcoin. This is to ensure that bitcoins could not be easily manipulated by external factors which can lead to abuse and misuse. According to CEO and co-founder of TeraExchange, Christian Martine, says that regulated swap trading is more efficient and it gives confidence to investors who want to trade. With a reliable price index, it establishes stability and trust in the growing marketplace. The Commodity Futures Trading Commission is the agency responsible in regulating swaps and futures.
Using information from 6 different changes, the Tera Bitcoin Price Index was created in order to ensure that there would be no suspicious movement in prices. With the bitcoin derivatives, clients can lock in the dollar value of their bitcoins while the difference will be settled after the contract ends. Both have to refer to the new price index which is posted in real time.
According to TeraExchange, they already have more than 50 clients who’re interested in the financial product. Most of them are merchants and hardware suppliers. And starting this Friday, the swap is already available. The company is now starting to market it and the good news is that it has already received commitments from companies offering prices for both buyers and sellers in the trading platform.
The bitcoin derivative along with the Tera Bitcoin Price Index was developed in light of the increasing demand of merchants, payment processors and the like for a reliable and efficient hedging tool. Since the bitcoin swap trading is subject to rules and regulations set forth by the CFTC and TeraExchange, clients will have confidence and trust to hedge and trade.