With the swift expansion of the crypto industry and the surge of interest of individuals and institutions in digital assets such as bitcoin, central banks around the world are rolling up their sleeves and familiarizing themselves with the bits and bytes of digital money thus opening up new avenues for harnessing the technology of regulated digital trading in cryptocurrencies, the latest example being that of the UK.
As per the press release published on April 13 2023, The London Stock Exchange Group ( LSEG ) has collaborated with the Global Futures and Options (GFO-X) an institutional-grade digital trading venue focused on cryptocurrency derivatives, to offer Britain’s first regulated trading and clearing in Bitcoin index futures and options derivatives. Subject to regulatory approval, the contracts will stem from GFO-X and be part of a newly created segregated clearing service called LCH Digital Asset Clear.
This partnership between LCEG and GFX-O, licensed by UK’s Financial Conduct Authority (FCA) seeks to add trust in the digital asset derivatives ecosystem of the United Kingdom, bringing cryptos a step closer to mainstream finance.
Head of the LCH DigitalAsset Clear Frank Sausson stated that “Bitcoin index futures and options are a rapidly growing asset class, with increasing interest among institutional market participants looking for access within a regulated environment they are familiar with. Offering centralized clearing for these cash-settled dollar-denominated crypto derivatives contracts on GFO-X is an important development for the market.”
As per a report by Atlantic council 114 countries, representing over 95 percent of global GDP, are exploring a Central Bank Digital Currency . In May 2020, only 35 countries were considering a CBDC. A new high of 60 countries are in an advanced phase of exploration (development, pilot, or launch). As of December 2022, all G7 economies have now moved into the development stage of a CBDC and 18 of the G20 countries are now in the advanced stage of CBDC development.Nearly most country’s have made significant progress and invested new resources in digital trading projects over the past six months.
After the US set the example in 2021, other nations, such as Brazil, Hong Kong, and Argentina (earlier this week), followed suit saw the launch of multiple Bitcoin futures products in various countries, mostly futures ETFs.
In the Bahamas, the Sand Dollar—the local CBDC—has been in circulation for more than a year.Sweden’s Riksbank has developed a proof of concept and is exploring the technology and policy implications of CBDC.In China, the digital renminbi [called e-CNY,] continues to progress with more than a hundred million individual users and billions of yuan in transactions.
Thus in a span of few years, cryptocurrencies have grown from digital novelties to trillion-dollar technologies with the potential to influence the global financial system. The dizzying rise of Bitcoin and other cryptocurrencies has created new challenges for governments and central banks. Increasing popularity and high levels of market volatility have raised the stakes of the digital asset experiment.