FalconX Exploits BlackRock’s Index Provider To Revolutionize Crypto Derivatives

Key Points:

• FalconX offers derivatives contracts based on BlackRock’s Bitcoin ETF index.
• Contracts provide exposure against reference rates provided by CF Benchmarks.
• Contracts underpinned by regulated CME CF Bitcoin Reference Rate (BRR) and CME CF Ether-Dollar Reference Rate for settlement.

FalconX has recently announced that it will now offer a range of derivatives contracts based on the same index as BlackRock’s Bitcoin ETF.

This move is intended to build trust among institutional investors and increase transparency in the digital assets industry. The suite of products offered by FalconX includes swaps, options, and non-deliverable forwards, which will provide exposure settled against reference rates provided by Financial Conduct Authority-regulated crypto index provider CF Benchmarks.

Sui Chung, CEO of CF Benchmarks, stated that derivatives benchmarked against resilient and regulated indices are the primary route institutions take to gain exposure to the crypto asset class. FalconX and CF Benchmarks are responding to the growing demand for more transparent financial instruments within the digital assets sector by providing an assortment of derivatives contracts, based on consistent benchmarks.

These contracts will be underpinned by the CME CF Bitcoin Reference Rate (BRR) for settlement when providing exposure to Bitcoin (BTC) while exposure to Ether (ETH) will be settled against the CME CF Ether-Dollar Reference Rate. The BRR aggregates the trade flow of major Bitcoin spot exchanges during a specific calculation window into a once-a-day reference rate, similar to Ether’s.

Established in 2016, BRR serves as the settling index for futures contracts put forth by both the CME Group and Crypto Facilities MTF. It is also used to determine the value of investment products from leading financial firms like WisdomTree Europe.

The contracts offered by FalconX match up with the same set of indexes as those proposed for BlackRock’s prospective spot Bitcoin ETF in the US, filed last month. Amidst speculation over whether the world’s largest asset manager can overcome regulatory hurdles to get such a product approved in the US, as it has been in Canada and the European Union since 2021, if approved, institutional demand for such products is expected to increase, providing an additional boost to regulated offerings at a time when larger players have begun asking for it.

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