Liquidity Provider B2C2 Launches Gold Derivative Settled in Bitcoin

Crypto liquidity and OTC provider B2C2 has launched a gold derivatives product that synthetically trades against bitcoin in what the firm says is an important evolution in the safe-haven asset trading space.

Launched in 2015 and receiving regulatory approval for crypto derivatives in the U.K. earlier this year, B2C2 offers bulk crypto purchases through its API service.

With the firm’s new product, clients can physically settle synthetic trades with bitcoin, which correspond to physical gold stored in vaults. Synthetic positions combine various underlying assets to mimic the returns of another product without actually holding the product.

The firm told CoinDesk in an email that the benefit of the setup is that “it’s simpler to trade than the cash underlier for a variety of operational reasons, and typically represents the majority of activity in the product/asset.”

Clients can settle the trade with a number of cryptocurrencies. “These tokens will give them access to the underlying metal since they correspond to ownership of physical gold in vaults,” B2C2 said.

In a statement, founder and CEO of B2C2 Max Boonen said the gold and bitcoin’s roles as haven assets spurred the products development:

“The current macro environment, dominated by uncertainty over economic growth and inflation, is prompting central banks to rethink monetary policy and market participants to reassess the likely path of interest rates.”

Year-to-date, bitcoin’s price has doubled followed by a 15 percent bump for gold, currently sitting at $1,500 per ounce.

“Conflicting narratives abound, fueling market activity, and we expect demand to only grow for ways to gain and manage exposure to deflationary assets such as gold and bitcoin,” Boonen added.

However, as CoinDesk previously reported, bitcoin’s recent price moves have not been fully indicative of the digital gold mantra its proponents have rallied behind.

Fears of a U.S. recession have resurfaced in recent days and the resulting risk aversion quickly brought a boost to gold prices. Bitcoin, though, has been somewhat slower to pick up bids.

Gold bars image via Shutterstock