Wyre, a blockchain money transfer company servicing OTC and cryptocurrency exchanges announced it has acquired Hedgy, a smart contract platform built on top of the Bitcoin blockchain. Hedgy Co-founder and CEO Matt Slater, will be joining Wyre as an advisor.
The Wyre team said, “Our acquisition of Hedgy’s platform technology brings us closer to our aim of offering a derivatives software product that is compliant with federal commodity laws and regulations. The Hedgy team built an incredibly powerful product that can unlock a new level of accessibility for financial instruments around the world. In addition to incorporating their technology into our stack for partners and users.”
Wyre is in the process of developing services and product offerings that fall within three categories of regulated activity:
- Money Transmission (FinCEN), Active — Sending/receiving payments for users.
- Securities (SEC), Pending — Buying/selling security assets for users.
- Commodities and Derivatives (CFTC), Pending — Providing software that allows users to create and execute smart swap contracts and report related data to swap data repositories.
Wyre expects derivatives may have value in several different scenarios which include:
- Mining — Organizations guaranteeing prices for 28 / 60 / 90 days. Derivatives may afford miners with an opportunity to avoid the volatility and costs associated with mining that is detrimental to their core business.
- Security Token Offerings — Teams that are raising capital will have the ability to provide transparency publicly to their investors. If a team raises funds and accepts bitcoin, they’ll be able to publicly verify how much is being held, and how much of that exposure has been hedged through the use of derivatives. This transparency may provide investors with greater confidence as to how the teams are managing their balance sheet.
- Fund Managers — Fund managers that believe prices may be shifting may use derivative instruments to reduce the risk of adverse price movements relative to the value of their cryptocurrency portfolios.
- Hedging Commercial Risk — Businesses that run smart contracts or otherwise require crypto assets to cover transaction costs on a blockchain network can use derivatives to effectively “lock in” the price of these assets. Similarly, businesses that sell crypto assets may use a derivative to offer some downside protection against a decline in the value of bitcoin or ether that they will receive on the token generation event date.