Galaxy trades first fully blockchain-settled OTC option

by Arthur · May 16, 2023

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Galaxy recently completed the world’s first over-the-counter options trade settled entirely on-chain, marking an expansion of the firm’s trading capabilities by leveraging the benefits of decentralized finance infrastructure.

On-chain OTC options trading represents the next evolutionary step in trading and finance. Using DeFi and blockchain technology, eligible counterparties can now trade bilateral options linked to digital assets with Galaxy in a trustless manner that reduces credit risk normally associated with traditional OTC options trading.

“We are thrilled to offer our clients the ability to trade OTC options fully on-chain in a simple, easy-to-execute way through Galaxy,” said Jason Urban, Global Head of Trading at Galaxy. “We believe that by leveraging DeFi, we can help investors navigate two of the most relevant issues in finance today: Mitigating credit risk and protecting privacy around transaction details.”

Galaxy had recognized an increase in demand for on-chain OTC options trading following a series of recent market events that highlighted the vulnerabilities of traditional bilateral options trading. Galaxy used Ribbon Finance’s new on-chain options trading platform Aevo to execute, margin and settle an OTC options trade with crypto investment company CoinFund in what we believe is the world’s first on-chain bilateral options trade.

As always, Galaxy incorporated its strict compliance and oversight procedures into this process, as well as all future on-chain OTC options trades, including due diligence of qualified counterparties and regular reporting to relevant regulatory agencies.

“As a crypto-native investment firm that has worked closely with Galaxy for a long time to execute bilateral derivative trades off-chain, we are proud to make the first regulatory OTC options trade where the entire settlement lifecycle took place on-chain,” said Jon Campagna , Partner and Head of Trading, CoinFund. “We look forward to using this innovation to generate value for our investors.”

Galaxy, through its Global Markets business, helps investors access the growing digital asset market, offering deep, diverse liquidity across a range of trading venues, including centralized exchanges, OTC markets, and now through a DeFi platform. Galaxy works with more than 960 counterparties, with a consistent focus on the growing needs of its clients in the digital asset space.

Source: Galaxy Digital