UK asset manager M&G invests $20M in Bitcoin derivatives exchange

The investment arm of UK-based pension fund M&G has invested $20 million in the country’s first regulated Bitcoin (BTC) derivatives exchange, Global Futures & Options Holdings (GFO-X).

An announcement from M&G and GFO-X outlined the details of the investment, which forms part of a $30 million Series B funding round for the derivatives exchange. The platform will initially offer clearing of Bitcoin index futures and options contracts.

The move provides a platform for traditional finance institutions to gain exposure to a variety of cryptocurrency derivatives investment products. GFO-X is set to become a Financial Conduct Authority (FCA) regulated and centrally-cleared trading platform for crypto derivatives.

The investment capital stems from M&G’s Crossover strategy, which was seeded from a series B funding round which draws from the $138 billion Prudential With Profits Fund. The Crossover strategy is aimed at “patient growth equity” to fast-growing private companies.

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The funding is aimed at creating a hub for trading and clearing cryptocurrency derivatives and fostering innovation in the sector. Part of the investment sees M&G join the board of GFO-X.

A statement from M&G portfolio manager Jeremy Punnett highlighted the potential for the UK and London to become a leading destination for cryptocurrency technology and investment.

“The lack of regulated trading venues is materially hampering the growth of the digital currency trading market,” Punnett added.

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GFO-X CEO Arnab Sen added that evolving regulations in the UK and Europe will help cryptocurrencies edge their way into mainstream finance offerings. Still, this eventuality depends on integrating traditional market structures to address perceived risks associated with the emerging asset class.

“However, building a regulated financial market ecosystem is complex, time-consuming and expensive, and the pitfalls of taking shortcuts are now clear for all to see,” Sen said.

“The long-term viability of digital assets and the digitization of real tangible assets requires careful collaboration between traditional market participants and modern innovators.”

As investors continue to show interest in cryptocurrencies, the FCA recently issued additional guidelines to industry service providers to ensure compliance with UK crypto asset promotion rules. Some operators have opted to leave the country, while others have endeavored to meet strict requirements to advertise in the UK. 

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