Global financial settlement solutions provider Ripple has announced that it is partnering with Crypto Facilities, bitcoin derivatives exchange, to create a marketplace for XRP derivatives. An XRP derivatives market will enable both hedging and speculative positioning in XRP and also contribute to price discovery and market efficiency in XRP. Ripple believes its partnership with Crypto Facilities will play a key role as they commercialize XRP for institutional use cases.
Crypto Facilities is a London-based financial services firm that provides FCA-regulated risk management and trading solutions for digital assets. Crypto Facilities’ products focus on functionality, counterparty credit risk protection and secure asset custody. Ripple will be looking at implementing these features to XRP derivative offerings on Crypto Facilities’ marketplace.
XRP is the native digital asset to the Ripple network. While XRP is not required to transact on Ripple, it is positioned to create more competitive foreign exchange markets for cross-border payments. Ripple describes the value proposition for XRP as a ‘highly efficient bridge currency that enhances network effects and market depth across currency conversions on Ripple and in the developing Internet of Value’. In order to support this use case, banks and market makers that provide liquidity may need to hold XRP in significant size and thus need a way to manage volatility.