Popular cryptocurrency exchange platform BitMEX wants to expand into the derivatives products sector. Speaking on April 12 in an interview with analyst Luke Martin on the Venture Coinist Podcast channel, Arthur Hayes, co-founder and Chief Executive Officer of BitMEX, spoke on various subjects on his entrepreneurial journey and how BitMEX plans to stay relevant in the dynamic crypto space.
In the interview, Hayes gave glowing remarks on Bitcoin, and its role on the exchange’s success over the past few years. He pointed out that BitMEX only takes Bitcoin as collateral, which allows the exchange to process transactions without third-party or human interventions and as thus, can easily onboard customers within minutes.
A Crypto Options platform in the works
Hayes revealed that the company is in the preliminary stages of developing a cryptocurrency options trading platform. When questioned on the timeline for the launch of the platform, Haynes said that BitMEX will “probably have our own options platform in 12 to 18 months.”
Trading options are financial derivatives that give investors the opportunity to hedge their positions on a specific asset. More specifically, a trader can use an option to purchase or sell a stated amount of an asset at a specific price in the future.
Bitcoin-enabled Stock Investments
Hayes also announced that BitMEX is investing in a new startup that allows people to invest in popular Nasdaq and S&P 500 stocks using their Bitcoin holdings, while also eliminating any Bitcoin-USD risk. Speaking on the startup’s modus operandi, Hayes said:
“You’ll send Bitcoin. They’ll FX it into Dollars, and allow you to buy a swap. When you want to leave, you’ll sell the swap, get Dollars back, and then you can get your Bitcoin.”
Hayes noted that the Bitcoin-backed product would provide a bridge between the emerging markets and the “most liquid and notable indices in the world.”
Founded in the Seychelles 2014, BitMEX has grown to become especially popular among Asian investors and traders. As of this writing, the exchange is ranked 3rd among exchanges in the world by reported volume, with $1.065 billion traded over the past 24 hours.
No additional Coins for now
Also, the CEO fielded questions about one of the most-asked questions about BitMEX’s operation; whether or not they will be adding another crypto asset to their catalog.
However, while there are tons of new in-house tokens being listed by various crypto exchange platforms, the exchange has been notably fixed on keeping a tight-fisted approach to the token listing. Currently, BitMEX’s list of cryptocurrencies includes Bitcoin (BTC), Bitcoin Cash (BCH), XRP, and Litecoin (LTC). In the podcast, Luke asked Hayes whether BitMEX would be adding any other digital assets to its listing.
Hayes answered in the negative for now, stating that derivatives will require a sufficient amount of liquidity in the spot market. He pointed out that if BitMEX should simply list a random coin, the market makers wouldn’t be able to hedge the risks, noting that Binance (another crypto exchange platform), already has a wide variety of coins where market makers want to price a derivative. According to him, a case such as this will make the exchange spread too wide, and this scenario won’t be suitable for the exchange’s clients.
“From a client perspective, it’s a terrible experience, I’m treating a leveraged product that has a wider spread, then the underlying on the spot market and I’m just increasing my risk of getting liquidated. And that’s something that we don’t want to do.”
Hayes said that when his company decides to add a new product, they would like for market makers to make “good type prices” for their clients. He pointed out that this same reason is why BitMEX won’t have as many coins in its listing as Binance does.