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First Cryptocurrency Futures MTF

6th July 2020

Kraken recently authorised as first cryptocurrency futures MTF

The FCA recently signalled its implied support  in regulating the crypto currency derivative exchange space by authorising Kraken futures (Crypto Facilities Ltd) as the first cryptocurrency futures MTF in the EU. This is a good sign for the UK and EU that has historically lagged behind the US in terms of support for the crypto space. Kraken’s authorisation means that now for the first time crypto-futures will be traded on a trading venue (TOTV) and in scope of the stringent MiFIR transparency regime including being applicable to OTC assets referencing these futures products. Kraken’s recent authorisation as an MTF is likely to act as a test of the FCA’s appetite for this type of busines model. However, it is not without its nuances especially around meeting the MiFIR transaction reporting and transparency requirements where the reporting regimes are not currently fully geared towards facilitating assets referencing decentralised cryptocurrencies. Sourcing reference data to meet the MiFIR reporting requirements could also pose a challenge. However, Kraken’s authorisation is hope for all crypto derivatives exchanges looking to be authorised on the MTF or quite possibly OTF routes.

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