Startup Exchange Aims to Offer First EU Crypto Derivatives for Institutions

An Amsterdam-based exchange is angling to become the first European Union-regulated entity offering institutional investors exposure to crypto derivatives.

D2X just raised $5.7 million in a seed round led by the blockchain-focused venture capital firm Tioga Capital Partners to support that effort. The company’s valuation was not disclosed. 

The startup has applied for a license from the Dutch regulator AFM, CEO Théodore Rozencwajg told Blockworks.

The goal is for AFM to grant D2X a multilateral trading facility (MTF) license by the end of the third quarter, Rozencwajg said. Because European regulators have reciprocity agreements with each other, the exchange could then market throughout the EU.

“We identified that there was huge demand in Europe, basically, for institutions wanting to get into the space and specifically in the derivatives segment, but adoption was still pretty slow,”  Rozencwajg said. 

Another investor joining the round, Flow Traders, is a leading crypto market-maker. The idea is to tap the firm for additional liquidity after D2X launches, Rozencwajg said.

At launch, which could come as soon as September, D2X plans to offer options and futures built on Bitcoin and Ethereum. The exchange won’t offer spot trading, focusing exclusively on cash-settled derivatives denominated in euros. 

Other exchanges have previously received MFT approvals from the United Kingdom, but Brexit has prevented them from being used for passport purposes. 

Rozencwajg came up with the idea for D2X while working with co-founder and chief technology officer Don van der Krogt at Netherlands market-maker All Options. The pair explored the possibility of starting an in-house crypto trading desk — which was too complex from a regulatory standpoint — before starting up D2X in late 2020.

The company raised a pre-seed round to kickstart operations and now has 13 employees, which Rozencwajg expects to grow to 30 by September 2022. The latest capital infusion will be deployed in three main areas: risk management, technology and regulation.

In addition to the Brussels-based Tioga Capital and Flow Traders, Darley Technologies, Fortino Capital, Picus Capital, Kima Ventures, and Philippe Jabre’s family office also participated in the round.

Laetitia Grimaud co-founded D2X with Rozencwajg and van der Krogt. Frederic Colette, formerly the head of Societe General’s prime brokerage, holds the title of chief operating officer.  Ernest van der Hout, previously the head of risk for clearinghouse LCH.Clearnet, is the exchange’s head of risk.

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