Wyre Payments, the blockchain-based payment services provider has acquired a 100 percent stake in Hedgy, a Bitcoin derivatives startup and a smart contract platform built on top of the Bitcoin blockchain. The size of the deal was not disclosed. Wyre said that its acquisition of Hedgy’s platform technology brings it closer to its aim of offering a derivatives software product that is compliant with federal commodity laws and regulations.
The deal will help Wyre broaden the scope of the services it provides to crypto startups. Specifically, the access to financial instruments such as forward contracts, swaps and more. Wyre currently provides cross-border payments using bitcoin, ethereum, litecoin, and other cryptocurrencies to settle transactions.
Wyre plans to take advantage of Hedgy's ability to "navigate" the regulatory space. Ioannis Giannaros, the chief operating officer (COO) at Wyre told CoinDesk:
"This is a really highly regulated area, and in this sense Hedgy generally has been extremely ahead of the time. They were doing smart contract derivatives at the time ethereum wasn't even there yet."
As part of the deal, Hedgy co-founder and CEO Matt Slater will join Wyre as an advisor. Wyre is in the process of developing services and product offerings that fall within three general categories of regulated activity: Money Transmission (FinCEN), which is Active and is for sending/ receiving payments for users; Securities (SEC), a Pending product, for buying/selling security assets for users; and Commodities and Derivatives (CFTC), another pending product and is for providing software that allows users to create and execute smart swap contracts and report related data to swap data repositories.
Wyre states that in the world of bitcoin, the volatility that the markets have seen is part of the appeal to retail speculators, investors, and professional traders. Over time, it expects to see this volatility cooldown (although it might be a while!). As markets become less volatile, it expects to see an increase in the demand for creative financial products such as crypto asset swaps, options, and futures. It is also expecting derivatives may have value in several different scenarios such as mining, security token offerings, hedging commercial risk, etc. and that there may be an even broader use of derivatives if volatility reduces over time.