Anchorage Digital says its U.S. options business has grown beyond a federal swap-dealer threshold, prompting an affiliated company to seek registration with the agency overseeing derivatives markets. Anchorage Digital Swap Dealer, LLC submitted its application to the National Futures Association (NFA) for registration with the Commodity Futures Trading Commission (CFTC), the company said.
For firms that meet the swap-dealer definition, NFA guidance measures gross notional swap-dealing activity over a 12-month period; registration is required once it exceeds $8 billion. Anchorage has not disclosed its total activity or the amount above that level. The CFTC delegated swap-dealer registration to the NFA in 2012.
Anchorage traces the business’s growth in part to public companies that hold Bitcoin (BTC) and Ether (ETH), as well as asset managers and funds that use options to manage exposure. The company says institutional clients want a U.S.-regulated counterparty, with legal documentation and margin and reporting practices aligned with their existing risk controls. Anchorage presents those arrangements as a reason for seeking registration.
The firm says the rules address treatment of counterparties and trade confirmation, as well as reporting, margin, risk management and capital. These obligations would apply to the entity seeking registration, and the company has not quantified their cost. Anchorage describes the regime as a Dodd-Frank framework for swap dealers that also applies in interest-rate, credit and foreign-exchange markets.
The Block reported that the NFA is reviewing the filing; Anchorage’s announcement did not mention a review status. The publication also reported that, if approved, Anchorage expects to offer European-style options on Bitcoin and Ether with terms running as long as one year. Anchorage Digital CEO and co-founder Nathan McCauley gave no estimate for the review, The Block reported. Anchorage’s announcement confirms an application, not approval for swap-dealer status, and does not give an expected NFA decision date.
