Gibraltar and Bullish Introduce Crypto Clearing Framework

Gibraltar has partnered with cryptocurrency exchange Bullish to establish a new regulatory framework aimed at clearing crypto derivative contracts, marking a significant step towards greater oversight in the crypto space. The collaboration, which also involves the Gibraltar Financial Services Commission, seeks to address the current lack of specific regulations governing crypto derivatives clearing.

In a press release issued on Tuesday, Tom Farley, CEO of Bullish, highlighted the importance of applying the same level of risk management and regulatory oversight found in traditional markets to the crypto sector. According to Farley, “While Central Counterparties have become more robust in other asset classes, this initiative will bring that same robust risk management and regulatory oversight to the crypto clearing space that EMIR & Dodd-Frank brought to traditional derivatives markets.”

The new framework aims to introduce a regulated clearing house that operates independently from the exchange, enhancing transparency and reducing risks for participants. This approach will also allow certain cryptocurrencies to be used as collateral and settlement currency, although the specific cryptocurrencies have not yet been disclosed. By expanding the institutions able to hold collateral, Bullish expects to increase market participation and foster trust within the sector.

Gibraltar’s Minister for Financial Services, Nigel Feetham, emphasized the territory’s reputation for pioneering clear regulations and embracing emerging technologies. Notably, Gibraltar was the first jurisdiction to introduce legislation for firms utilizing distributed ledger technology.

Bullish, which launched in 2021 with backing from Block.one and a $10 billion funding pool, plans to roll out its clearing services later this year, along with options trading. However, the exact timeline for these developments remains unclear.