We help our clients to maximize the potential of their digital assets.
Crypto Facilities is a London-based financial services firm and provides risk management and trading solutions around digital assets such as bitcoin. Our management has extensive financial markets expertise from top investment banks, and we apply high standards of compliance, reporting and risk management across our whole business.
Crypto Facilities Ltd (FRN 630784) is an Appointed Representative (AR) of Met Facilities LLP which is authorized and regulated by the Financial Conduct Authority (FRN 587084).
Meet The Team
Co-founder and COO
JC has almost 20 years of experience in engineering state-of-the-art trading infrastructure with a particular focus on medium and high frequency trading systems, automated trading strategies and risk management solutions. He previously worked for BNP Paribas and Société Générale. JC holds Grande Ecole M.Sc. degrees in Engineering and Physics.
Dr. Timo Schlaefer
Co-founder and CEO
Timo has a deep understanding of derivatives, trading and risk management. He previously was an Executive Director in credit quantitative modelling at Goldman Sachs, London. Before that he worked in Mergers & Acquisitions at Goldman Sachs, Frankfurt. Timo is a PhD in Financial Engineering and holds MBA degrees from European and American universities.
Arnaud has been working for 15 years in investment banking with deployments in New York, London and Paris where he was leading IT projects on trading platforms, risk and PnL management, referential management and back-office systems. He currently heads an IT division at a CIB. Arnaud holds a Grande Ecole M.Sc. degree in Engineering.
Bhavesh is Managing Partner at Met Facilities and has over 17 years financial markets experience with a focus on risk management, strategy and regulation. He has previously worked for Morgan Stanley, IBM Consulting, Tokai Bank Europe and has led projects across various financial market institutions. Bhavesh holds an MBA and a BSc in Business.
Danny is Group CEO and Managing Partner of the Met Group, a diversified financial markets firm. He previously worked for Dow Jones, Hewlett Packard and sits on the board of a number of other financial services joint ventures. Danny holds a first class honours degree in Business from Manchester Metropolitan University.
Houman B. Shadab
Houman is a Professor at New York Law School and a Director of its Center for Business and Financial Law. He is a prolific and influential expert in financial law that focuses on blockchain technologies. Houman has a J.D. from the University of Southern California and B.A. in Economics from the University of California at Berkeley.
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Crypto Facilities Raises Seed Round to Build Digital Assets Futures Platform06-Sep-2016
London-based Crypto Facilities which operates a trading platform for digital assets and is the first provider of regulated Futures on bitcoin, today announced a $1.5m seed round led by ...Read More
CME Group and Crypto Facilities Announce Launch of Bitcoin Reference Rate and Real-Time Index02-May-2016
CME Group, the world's leading and most diverse derivatives marketplace, today announced it will collaborate with Crypto Facilities Ltd., a digital assets trading platform, to develop two new products ...Read More
Bitcoin startups lure quant whizzes from Wall Street07-Aug-2015
Armed with a doctorate in financial engineering, 34-year-old Timo Schlaefer was on his way to a promising career at Goldman Sachs in London. Previously with the bank's mergers and acquisitions team, he became an executive director of ...Read More
Crypto Facilities Adds Settling and Clearing Standards to Bitcoin Trading with Elliptic Partnership09-Jul-2015
Crypto Facilities, a Bitcoin derivatives exchange, and Elliptic, a Bitcoin analytics and security firm, announced a partnership that will make the settlement and clearing mechanism of the exchange separate from its other functions. The exchange's ...Read More
New Tool Lets Bitcoin Firms 'Ring Fence' Customer Funds09-Jul-2015
Two London-based bitcoin startups have unveiled a new system that 'ring-fences' customer funds from other operations. As part of the set up, derivatives trading platform Crypto Facilities will continue to match buyers and sellers, but its partner, ...Read More
Former Goldman Sachs Director Launches Bitcoin Derivatives Brokerage Crypto Facilities26-Feb-2015
Crypto Facilities Ltd., a London-based broker founded by former Goldman Sachs Executive Director Timo Schlaefer, has announced the launch of its bitcoin derivatives trading platform.Read More
Ex-Goldman director aims to hedge your bitcoin risk25-Feb-2015
The nascent industry of bitcoin derivatives got a high-profile boost on Wednesday, as a London-based trading platform was launched by ex-employees of some of the world's leading investment banks.Read More
Crypto Facilities Raises Seed Round to Build Digital Assets Futures PlatformCrypto Facilities, 06-Sep-2016
London-based Crypto Facilities which operates a trading platform for digital assets and is the first provider of regulated Futures on bitcoin, today announced a $1.5m seed round led by Pamir Gelenbe's AngelList syndicate with participation from Playfair Capital, Digital Currency Group, String Ventures and hedge fund veteran Lee Robinson.
Since its launch in 2015, Crypto Facilities has established itself as the market leader in professional digital asset trading products, servicing private clients, investment firms and hedge funds. The firm has facilitated over $150m in bitcoin derivatives trades and recently announced a partnership with Chicago-based CME Group, the world's leading derivatives marketplace, to calculate and publish a reference rate and real time index on the bitcoin price, a step seen as sign of a further professionalization of digital asset trading.
Pamir Gelenbe said "The Crypto Facilities team combines deep product expertise, outstanding work ethic, and strong commercial acumen. They have achieved a lot with very little and are well positioned in the emerging digital asset derivatives space."
Barry Silbert, CEO of Digital Currency Group, said "We believe finance and investment professionals will play a big role in the bitcoin ecosystem, and Crypto Facilities is building a world-class bitcoin derivatives platform suited for sophisticated traders who want access to more complex financial instruments in bitcoin and a growing class of digital assets."
Nathan Benaich, Partner at Playfair Capital, added "Blockchain technology and digital tokens are rendering many unsolved, high-value problems tractable. Major asset classes, services and contracts will gradually become digitised such that they run on a blockchain and become tradable. The digital assets derivatives platform Crypto Facilities has built is crucial to this shift and will only become more so as the market matures."
Crypto Facilities has built products that enable traders to take a directional view on the price development of digital tokens and to manage their price risk. The firm also offers bitcoin custodial services. The capital from this financing round will allow Crypto Facilities to further enhance its infrastructure and product offerings, while continuing to work closely with financial regulators in the US and Europe.
Crypto Facilities CEO and cofounder Dr. Timo Schlaefer said, "Our investors bring deep expertise in financial markets and blockchain technology, and we are excited to be working with them in our next phase of growth. Blockchains will have a tremendous impact on how we transact and record information. Digital tokens have the potential to become a major asset class and we are at the forefront of facilitating trading these assets."
About Crypto Facilities
London-based Crypto Facilities is the market leader in professional trading products on digital assets, listing the first regulated Futures on bitcoin. The firm has facilitated trades in over $150m notional for its institutional and private clients and calculates the CME CF Bitcoin Reference Rate and Real Time Index.
About Pamir Gelenbe's AngelList Syndicate
Pamir Gelenbe's AngelList syndicate focuses on public blockchain and decentralised web and cryptocurrency investments. Pamir is an active early stage investor and Venture Partner at Hummingbird Ventures. Pamir is a board member of Eatupp, Kraken, On Device Research, Peak Games and Souq al mal and founder of the CoinSummit conference series.
About Playfair Capital
Playfair Capital is a London-based early stage venture capital firm investing in entrepreneurs building technology companies that re-imagine the way we live, work and play. We focus on companies creating experiential products and services to solve complex, high-value problems by using a combination of novel core technology, data and design. We provide the financial, operational, and strategic support our founders need to build category-leading companies. Since 2010, Playfair has backed over 40 companies including DueDil, Appear Here, Mapillary and Numerai.
About Digital Currency Group
Digital Currency Group builds, buys, and supports bitcoin and blockchain companies by leveraging our insights, network, and access to capital. Based in New York City, DCG has been an active seed investor in the digital currency industry with over 80 investments in 20 countries. Learn more at dcg.co.
About String Ventures
String Ventures is a seed and early stage VC fund that operates out of San Francisco and Istanbul, sourcing deals from Silicon Valley, San Francisco Bay Area, CEE and Turkey. String Ventures focuses on the Stanford University ecosystem, European hubs and top technical universities in CEE, targeting seed and early stage investments with the aim to be the first or second money in.
CME Group and Crypto Facilities Announce Launch of Bitcoin Reference Rate and Real-Time IndexCrypto Facilities, 02-May-2016
CHICAGO, May 2, 2016 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, today announced it will collaborate with Crypto Facilities Ltd., a digital assets trading platform, to develop two new products planned to launch in the fourth quarter of 2016: CME CF Bitcoin Reference Rate (BRR), which will provide a final settlement price in U.S. dollars at 4 pm London time on each trading day, and CME CF Bitcoin Real Time Index (RTI), which will allow users real-time access to bitcoin prices.
The BRR will aggregate the trade flow of major bitcoin spot exchanges during a specific calculation window into a once-a-day, transparent reference rate of the U.S. dollar price of bitcoin.
The RTI will be calculated by Crypto Facilities and will be based on global demand to buy and sell bitcoin aggregated into a consolidated order book. It will reflect the current market price of bitcoin in U.S. dollar terms and will be published approximately once every second.
"These products are designed to allow bitcoin traders, companies and other users to rely on a credible reference rate price source," said Sandra Ro, Executive Director and Digitization Lead at CME Group. "Delivering innovative products and services that meet the market's evolving needs is at the core of CME Group's business, and we are proud to lead the way for the industry as digital assets develop."
"The availability of robust reference prices with independent oversight is key to the professionalization of bitcoin trading and further establishes digital assets as a new asset class," said Dr. Timo Schlaefer, Crypto Facilities. "We are excited to work with CME Group on the construction and implementation of this reference rate and index."
CME Group, Crypto Facilities and Imperial College London will function as core members of an oversight committee responsible for overseeing the BRR. The oversight committee will develop a code of conduct for participants and regularly review the practices and standards followed in the determination process to protect the BRR's integrity.
"The Imperial College Centre for Cryptocurrency Research and Engineering (IC3RE) welcomes this important step in the further development of the use of cryptocurrency in the derivative markets," Professor William J. Knottenbelt, Imperial College London. "We are delighted to participate on the oversight committee during this transformational time."
Several bitcoin exchanges and trading platforms will provide pricing data upon which the reference prices will be calculated, including Bitfinex, Bitstamp, Coinbase, Genesis Global Trading, itBit and Kraken.
CME Group and Crypto Facilities designed the BRR around the IOSCO Principles for Financial Benchmarks.
For more information on this offering, please visit cmegroup.com/bitcoin.
About CME Group
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. Around the world, CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its exchanges based in Chicago, New York and London. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives. CME Group's products and services ensure that businesses around the world can effectively manage risk and achieve growth.
CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc. CBOT, the Chicago Board of Trade, KCBOT, KCBT and Kansas City Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.
About Crypto Facilities Ltd.
London-based Crypto Facilities is a digital assets trading platform and the leading provider of regulated derivatives on digital assets (www.cryptofacilities.com). The company's products serve to trade and manage the price risk of bitcoin and other digital tokens.
Crypto Facilities Announces Partnership with RippleCrypto Facilities, 29-Feb-2016
Crypto Facilities is excited to announce a partnership with Ripple, a provider of global financial settlement solutions, to create a marketplace for XRP derivatives. Banks, market makers and traders are holding XRP in significant size and will be able to use the new market place to hedge their XRP price risk or to put on speculative positions.
Ripple solutions lower the total cost of global settlements by enabling banks to transact directly, without correspondent banks, and with real-time certainty of settlement. Ripple's native currency XRP acts as a highly efficient bridge currency that enhances network effects and market depth across currency conversion rates on the Ripple network.
The new market place for XRP derivatives will adhere to Crypto Facilities' professional standards in terms of regulatory compliance, secure asset custody and counterparty credit risk management. By complementing the existing XRP spot markets, it will further enhance price discovery and market efficiency of XRP.
Crypto Facilities' partnership with Ripple is a further step towards establishing and institutionalizing derivatives on digital assets. Further detail on the new market place will be announced in the coming months.
Bitcoin startups lure quant whizzes from Wall StreetReuters, 07-Aug-2015
Armed with a doctorate in financial engineering, 34-year-old Timo Schlaefer was on his way to a promising career at Goldman Sachs in London. Previously with the bank's mergers and acquisitions team, he became an executive director of credit quantitative modeling at Goldman, where quants like Schlaefer are highly valued.
In February he gave that up, and launched a company called Crypto Facilities Ltd, a bitcoin derivatives trading platform, which now has six employees. For now, the platform trades bitcoin forwards, which are directly linked to the price of bitcoin, but it's also developing other digital currency derivative products.
"This is uncharted territory," said Schlaefer. "It's an exciting opportunity to participate in a new area of technology that has massive potential."
Bitcoin is a virtual or online currency created through a "mining" process where a computer's resources are used to perform millions of calculations. Once mined, bitcoins can be stored in an online wallet, traded in an online exchange, or used to buy goods and services.
Once the province of small-time investors driven by their distrust of government-backed currencies, now Wall Street bankers and traders are leaving high-paying jobs to join bitcoin start-ups, while big firms hire in-house to get their arms around bitcoin and the related 'blockchain' technology.
"A lot of people are entering the bitcoin space as the sector has reached an overall level of funding that's hard to ignore," said Jaron Lukasiewicz, founder and chief executive officer at New York-based bitcoin exchange Coinsetter. Lukasiewicz, 29, moved to the bitcoin world in late 2012, having left behind a six-figure salary in private equity at The CapStreet Group in New York.
Bitcoin is not backed by a government and its value fluctuates. On Thursday, it was trading at $278 BTC=BTSP, making the value of outstanding bitcoin worth about $4 billion. It has had a volatile history, with a rapid rally in 2013 that boosted its value to more than $1,150 per bitcoin at one point.
Right now, Crypto Facilities' Schlaefer probably won't make anywhere near the kind of money that he would potentially earn at Goldman. But it's less about the compensation for Schlaefer and more about being part of the growth in bitcoin and its underlying technology, the blockchain.
The blockchain - a ledger or list of all of a digital currency's transactions - is viewed as bitcoin's main technological innovation, allowing users to make payments anonymously, instantly, and without government regulation.
Software engineers have started developing multiple applications for the blockchain, including a land title record system in Honduras to the clearing of trades in financial markets.
Meanwhile, Wall Street firms are doing their own hiring in the cryptocurrency realm. In June, online bitcoin job ads surged to a record high of 306, according to data from Wanted Analytics, with demand coming from banks such as Capital One and tech companies such as Intel and Amazon. In previous months, Citigroup and TD Canada Trust posted bitcoin job ads as well.Risky Business
For 31-year-old Paul Chou, founder and chief executive officer of Ledger X, an institutional trading and clearing platform for bitcoin options, moving into the digital currency space represents what he hopes results in lucrative profits down the road. But there are other reasons for his shift.
LedgerX is awaiting regulatory approval from the Commodity Futures Trading Commission to trade and clear options on bitcoin. Chou said the firm hopes to operate the first regulated exchange and clearinghouse to list and clear fully-collateralized, physically-settled bitcoin options for the institutional market.
"I took a very large salary pay cut to do this, in return for equity in a start-up that can be worth a lot someday," Chou said.
Before LedgerX, Chou worked at Goldman Sachs in New York as a quant equity trader after graduating from the Massachusetts Institute of Technology with degrees in computer science and mathematics. Chou said his hours are much longer as an entrepreneur - he's constantly refining ideas for strategy and thinking which areas to focus on.
"The domain expertise, relationships, and career equity I've built are things I never could have done while at Goldman," Chou said. "As a former trader, I'm glad I made this trade-off at the stage of my career that I did."
It's a risky move, however. There are already several tales of bitcoin company failures and mismanagement.
U.S. bitcoin marketplace Buttercoin, for instance, shuttered its operations in April this year despite raising $1.3 million in funding. Bitcoin exchange MyCoin closed its doors in February of 2015, leaving about 3,000 investors out of pocket.
Tokyo-based Mt. Gox, once one of the most dominant bitcoin exchanges, closed its doors without warning in February last year, filing for bankruptcy and leaving investors approximately $500 million in the red.Bitcoin Investments, Hiring
Total investments in bitcoin companies for the first half of 2015 - totaling $375.4 million - have already exceeded 2014's total of $339.4 million, data from CB Insights showed. Last year's venture capital funding of bitcoin start-ups grew roughly 280 percent from 2013.
The number of bitcoin start-ups has increased by more than 80 percent from last year. As of end-July, there were 814 start-up digital currency companies, up from 444 a year earlier, according to Angel List, an online marketplace for start-ups seeking to raise money from angel investors.
As banks defer compensation and add more clawback provisions that give them the right to limit bonuses, traders are seeing better risk opportunities elsewhere, said San Francisco-based Rick Henri Chan, chief operating officer at Airbitz, a digital wallet platform.
Chan, 47, who joined the bitcoin industry three years ago, worked for Deutsche Bank as head of its over-the-counter derivatives technology in Japan, and was a trader at UBS and Morgan Stanley.
He works long hours at Airbitz, doing everything from strategy to raising money, but the work environment is more flexible. At Deutsche, Chan had a multi-million dollar package, and he admits to missing that paycheck.
"But we're doing something special here at Airbitz. And I do think our company will be valued at a lot more in the future," he said.
Crypto Facilities Adds Settling and Clearing Standards to Bitcoin Trading with Elliptic PartnershipWatersTechnology, 09-Jul-2015
Crypto Facilities, a Bitcoin derivatives exchange, and Elliptic, a Bitcoin analytics and security firm, announced a partnership that will make the settlement and clearing mechanism of the exchange separate from its other functions.
The exchange's client accounts will be hosted in vaults and insured by an A-rated, Fortune-100 underwriter. Each account will be settled blockchain technology every day and movement in the account can be verified through the blockchain.
The process differs from traditional Bitcoin trading venues, which typically combine clients' assets and manage them directly, according to the exchange.
Timo Schlaefer, CEO of Crypto Facilities, tells Sell-Side Technology that offering a settlement and clearing mechanism that separates Bitcoin custody from other exchange activities is a key component of reducing risk in the Bitcoin space.
"An exchange holding client funds is clearly one of the biggest risks in the Bitcoin ecosystem; 80 to 90 percent of the bad stuff that has happened [with Bitcoin] is due to exactly this problem," Schlaefer says. "It has to be removed, and I think the way to remove it is how you would do it in the business space. If you're an exchange, you don't want all the funds. I don't see any reasons why this should be different."
Schlaefer says Crypto Facilities, which was launched earlier this year, had always planned on implementing this service into its exchange. Both firms are based in London, and Schlaefer says the interactions the two sides had made him feel the Elliptic team had the right mindset for the job.Right Tech, Right Time
Blockchain technology was designed to do this type of work, according to Schlaefer, and he's surprised it's taken this long for it to catch on.
"It's a common practice in the Bitcoin space that exchanges hold the funds in some sort of pooled wallet that is like a black box for an outside viewer," Schlaefer says. "You can do it very transparently by using a lot of blockchain technology."
Schlaefer believes this is a significant step towards legitimizing Bitcoin trading among the capital markets.
"I know that institutional clients will not trade without this. I think it's a necessary condition for professional markets when it comes to trading Bitcoin," Schlaefer says. "They can't just send funds through a company where they don't have any credit risk protection. That's not the way they operate."
New Tool Lets Bitcoin Firms 'Ring Fence' Customer FundsCoinDesk, 09-Jul-2015
Two London-based bitcoin startups have unveiled a new system that 'ring-fences' customer funds from other operations.
Though common practice in capital markets, today's announcement is the first of its kind for the bitcoin space, where exchanges have lost millions to hackers targeting funds in their centralised wallets, or by simply not holding them at all.
In a statement, Crypto Facilities CEO Timo Schlaefer described the move as a "watershed moment" for bitcoin trading, adding: "Experienced market participants will immediately recognise that we have done away with one of the biggest risk factors in the bitcoin ecosystem."
Meanwhile, Elliptic's CEO James Smith said a segregated settlement system such as this was an "essential step" toward companies performing bitcoin trading on a larger scale. "With Crypto Facilities' strong and robust trading infrastructure, we expect trade in bitcoin derivatives will flourish, improving bitcoin's price stability and driving enterprise adoption," he added.Blockchain settlement
To use one of Elliptic's 'ring fenced' accounts, Crypto Facilities customers will be charged an annual fee - 0.75% of their account value. Alternatively, they can stick with the default offline storage the firm offers at no additional cost.
Each day, after Crypto Facilities' accounts are settled at 5pm (UTC) to reflect their trading movements in the last 24 hours, Elliptic will settle these balances in its accounts via an API.
Using the wallet addresses Elliptic provides, users will be able to cross-reference their daily account balance with bitcoin's blockchain.
It's the kind of simple real-time auditing that bitcoin's public ledger makes possible, without getting stuck in Merkle Trees and external reports - which often only provide a snapshot of an exchange's reserves at one moment in time.
The bitcoins themselves are held in Elliptic's cold storage vaults, which are fully insured. At its launch in early 2014, the vault was the first of its kind to insure bitcoin assets. Other key players in the bitcoin ecosystem, including Circle and Coinbase, have since followed suit.
Crypto Facilities and Elliptic bring enterprise standards to bitcoin tradingCrypto Facilities, 09-Jul-2015
09 July 2015, London - Bitcoin analytics and security firm Elliptic and bitcoin derivatives trading platform Crypto Facilities announced today the launch of a settlement and clearing mechanism that separates bitcoin custody from all other exchange functions.
Crypto Facilities' client accounts are now hosted in Elliptic's secure, KPMG-accredited vaults and are fully insured by an A-rated, Fortune 100 underwriter. Each client owns their own segregated, ring-fenced account which is settled on the blockchain every day. Any movement in the account is exposed to the client and can be independently verified on the blockchain.
The industry-first solution overcomes the traditional setup of bitcoin trading venues in which client assets are typically managed directly by the exchange and cannot be audited externally.
Jean-Christophe Laruelle, COO of Crypto Facilities, said, "Capital markets would never entertain the idea of having an exchange hold assets or of pooling funds together. The history of high profile hacks has demonstrated that this is not a solution for the bitcoin space either. With Elliptic we have found the ideal partner to define a whole new benchmark for bitcoin clearing and custody."
James Smith, CEO of Elliptic, said, "Our mission is to bring confidence and certainty to bitcoin. This deep integration of our two firms is an essential step towards enterprise-scale bitcoin trading. With Crypto Facilities' strong and robust trading infrastructure, we expect trade in bitcoin derivatives will flourish, improving bitcoin's price stability and driving enterprise adoption."
Crypto Facilities went live earlier this year and has quickly become popular with sophisticated traders. The new solution is available immediately and comes with a complete re-launch of Crypto Facilities' trading interface.
"This is a watershed moment for bitcoin trading." said Crypto Facilities CEO Timo Schlaefer. "Experienced market participants will immediately recognize that we have done away with one of the biggest risk factors in the bitcoin ecosystem."About Elliptic
London-based Elliptic provides bitcoin analytics and security services for the enterprise. Elliptic was the world's first bitcoin firm to secure insurance for bitcoin assets, the world's first bitcoin firm to receive accreditation by KPMG and pioneered a ground-breaking suite of bitcoin AML services. Elliptic is backed by Octopus Ventures and is the founding member of the UK Digital Currency Association (UKDCA), working with the UK government and financial regulators to help shape a sensible regulatory framework for digital currencies.About Elliptic
Crypto Facilities is a London-based financial services firm and provides risk management and trading solutions around digital assets such as bitcoin. The firm operates a proprietary bitcoin derivatives trading platform on www.cryptofacilities.com and is a broker for exchange-traded futures and options. Crypto Facilities was founded by Jean-Christophe Laruelle, a former Senior Trading Architecture Designer at BNP Paribas/Société Générale and Timo Schlaefer, a former Executive Director in Credit Quantitative Modelling at Goldman Sachs and a PhD in Financial Engineering.
Former Goldman Sachs Director Launches Bitcoin Derivatives Brokerage Crypto FacilitiesBitcoin Magazine, 26-Feb-2015
Crypto Facilities Ltd., a London-based broker founded by former Goldman Sachs Executive Director Timo Schlaefer, has announced the launch of its bitcoin derivatives trading platform.
In financial jargon, a derivative is a contract that derives its value from the performance of an underlying entity, in this case the exchange value of bitcoin. Crypto Facilities trades financial products such as bitcoin options and futures, allowing users to "go long" and bet that the price of bitcoin will rise, or "go short" and bet the price will fall. The first derivative offered by Crypto Facilities is a forward contract - a contract to buy or to sell an asset at a specified future time at a price agreed upon today - on the U.S. dollar price of bitcoin. The forward contract serves to hedge against bitcoin volatility, or to benefit from future swings in the bitcoin price.
The forward contract comes with different maturity months, and traders can choose from the nearest three in the March, June, September and December cycle. Once a forward reaches maturity, it will be settled automatically. Traders do not have to wait until maturity to get out of their position, but can trade out at any time. Buying one forward - the minimum trading unit - requires a minimum deposit of 0.50 bitcoin. To sell short one forward, the minimum deposit is 0.25 bitcoin.
As of this morning, one forward at September 15 was trading at USD $242, while the current Crypto Facilities Instantaneous Bitcoin Price Index (CF-BPI) was USD $236. The CF-BPI is calculated continuously based on the current best bid and ask prices observed on major bitcoin exchanges.
"Our forward is probably the simplest and most effective tool out there to protect yourself against bitcoin volatility," said Crypto Facilities Co-Founder and COO Jean-Christophe Laruelle. "If you want to lock in the value of one bitcoin, you sell one forward".
Forward contracts are traded between investors on the platform developed and managed by the brokerage, which matches sellers with buyers without acting as a central counterparty and takes a commission on all trades based on the official fee schedule. The brokerage, targeted at institutional investors and expert individual investors used to trading derivatives and futures, operates in bitcoin.
Crypto Facilities, which employs a team of qualified financial experts, was founded by Laruelle, a former Senior Trading Architecture Designer at BNP Paribas/Société Générale and Schlaefer, a former Executive Director in Credit Quantitative Modelling at Goldman Sachs who holds a doctorate in financial engineering.
The firm, registered with the U.K. Financial Conduct Authority (FCA) as an appointed representative for broking exchange-traded futures and options, adheres to strict compliance and security standards and holds bitcoin deposits in cold storage on offline, encrypted servers.
The availability of mature financial products such as Crypto Facilities derivatives shows that Bitcoin is taken more and more seriously by the financial establishment and that - like or not - the Bitcoin space is becoming more professional and mainstream.
"The Bitcoin space still lacks professional, reliable marketplaces, and this is what we provide," Schlaefer said. "We apply the same standards in terms of risk management, compliance and reporting as you would see in the traditional finance space." He added that the firm has a number of additional financial products in the pipeline and plans to expand its range of services.
Schlaefer told CNBC that he saw real potential in the technology behind Bitcoin - the blockchain - which is a publicly-distributed ledger system that makes sure all transactions are verified in a transparent, decentralized and secure fashion. The CNBC article observes that, like Schlaefer, the Bank of England has also said it sees huge potential for the technology behind Bitcoin.
In a recent paper titled "One Bank Research Agenda," the central bank said that Bitcoin could reshape the financial industry. A section of the paper (Page 31), dedicated to a Fedcoin-like scenario where central banks might issue digital currencies such as Bitcoin, notes that both the technology and financial sectors need to be engaged, as each brings important and distinct expertise.
"Creating such a system would entail creating a protocol for value transfer over the Internet, akin to what Berners-Lee did for information," the Bank of England paper says.
Ex-Goldman director aims to hedge your bitcoin riskCNBC, 25-Feb-2015
The nascent industry of bitcoin derivatives got a high-profile boost on Wednesday, as a London-based trading platform was launched by ex-employees of some of the world's leading investment banks.
Crypto Facilities was set up by former bankers from Goldman Sachs, Morgan Stanley, BNP Paribas and Société Générale.
The platform pitches itself as a broker which specializes in bitcoin derivatives, and trades financial products like options and futures which are directly linked to the price of the cryptocurrency. Thus, it allows users to "go long" and bet that the price of bitcoin will rise, or "go short" and bet the price will fall.
Timo Schlaefer, the co-founder and CEO, was previously the executive director of credit quantitative modeling at Goldman Sachs in London. Speaking to CNBC via telephone Wednesday, he said he had worked for the investment bank for ten years but left to create this brokerage firm.
"I really wanted to help this industry develop and bring the experience that I have," he said.
Schlaefer added that he saw real potential in the technology behind bitcoin - the block chain - which is a publicly-distributed ledger system which makes sure all transactions are verified in a transparent, decentralized and secure fashion.
Crypto Facilities is officially regulated by the U.K.'s Financial Conduct Authority. However, the regulator only oversees the company's traditional derivative operations, as there are not yet any official regulations on the digital currency in the country.
Like Schlaefer, the Bank of England has also said it sees huge potential for the technology behind the digital currency bitcoin.
In a report in September, the central bank said it could have far-reaching implications and the potential to reshape the financial industry. However, the bank also outlined a series of hypothetical risks that the currency could pose to the U.K.'s financial stability.
The risks included a bitcoin price crash on the back of unhedged exposures by important financial institutions, or if investors became leveraged via derivative contracts.
Schlaefer responded to the research, saying that derivatives tended to have a "smoothing effect" on prices and that the company would use the same risk management tools and supervision as it does on its more traditional operations.
Bitcoin is the most popular of the "virtual" currencies which allow users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining.
Singapore-based Coinarch is another bitcoin trading firm that deals with derivatives for the cryptocurrency, and Schlaefer told CNBC that anecdotally he knew of other firms in Russia, China and the Seychelles that also had similar platforms.
Crypto Facilities Ltd Launches Bitcoin Derivatives Trading PlatformCrypto Facilities, 25-Feb-2015
LONDON - Crypto Facilities Ltd, a London-based broker, announced today the launch of its bitcoin derivatives trading platform www.cryptofacilities.com.
The platform initially hosts a Forward contract on the USD price of bitcoin. The Forward serves to hedge against bitcoin volatility or to benefit from future swings in the bitcoin price. The firm has developed an integrated risk management, margining and settlement framework tailored to the high volatility of bitcoin.
"Our Forward is probably the simplest and most effective tool out there to protect yourself against bitcoin volatility. If you want to lock in the value of one bitcoin, you sell one Forward - that's it. At the same time our market is extremely robust and secure. There is no central counterparty and all portfolios are marked to our proprietary bitcoin price indices." said Jean-Christophe Laruelle, Co-Founder and COO.
The platform aims to appeal to sophisticated investors and is backed by a high-profile team of experienced professionals from top investment banks and regulatory advisors. "The bitcoin space still lacks professional, reliable marketplaces, and this is what we provide. We apply the same standards in terms of risk management, compliance and reporting as you would see in the traditional finance space." said Timo Schlaefer, Co-Founder and CEO.
The firm plans to expand its range of services going forward. "We have a number of additional products in the pipeline, some of which will be unprecedented in the bitcoin space." said Timo Schlaefer.About Crypto Facilities Ltd
Crypto Facilities Ltd is a London-based derivatives broker. The firm was founded by Jean-Christophe Laruelle, a former Senior Trading Architecture Designer at BNP Paribas/Société Générale and Timo Schlaefer, a former Executive Director in Credit Quantitative Modelling at Goldman Sachs and a PhD in Financial Engineering.
Crypto Facilities Ltd (FRN 630784) is an Appointed Representative (AR) of Met Facilities LLP which is authorized and regulated by the Financial Conduct Authority (FRN 587084). This AR relationship covers the firm's regulated activities, namely the broking of exchange-traded futures and options. The Bitcoin Forward is not a Specified Investment as defined in the Financial Markets Act 2000 and therefore not part of the firm's regulated activities.