Galaxy recently completed the world’s first over-the-counter option 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. By utilizing DeFi and blockchain technology, eligible counterparties can now trade bilateral options tied to digital assets with Galaxy in a trustless manner that alleviates credit risk normally associated with traditional OTC options trades.
“We are thrilled to offer our clients the ability to trade OTC options entirely on-chain in a simple, easily executable 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 pertinent issues in finance today: Alleviating 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 utilized Ribbon Finance’s new on-chain options trading platform Aevo to execute, margin and settle an OTC options trade with cryptonative investment firm CoinFund in what we believe to be the world’s first on-chain bilateral options trade.
As always, Galaxy incorporated its stringent compliance and oversight procedures into this process, as well as all future on-chain OTC options trades, including due diligence of eligible 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 off-chain bilateral derivatives trades, we are proud to be making the first regulatory compliant OTC options trade for which 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 variety 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 expanding needs of its clients in the digital asset space.
Source: Galaxy Digital
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