Established exchanges are getting serious about crypto. While prop shops have been deep in the bitcoin weeds for some time, now licensed and regulated trading venues are building—and in some cases, expanding—on the ground broken last year by Chicago’s exchanges.

Established and regulated players are entering the digital asset space, with both Eris Exchange and trueEx announcing crypto asset platforms and products this week.

Eris Exchange, known for its work in swap futures, announced on Wednesday that its digital asset arm, ErisX, plans to launch a derivatives exchange and clearing organization for crypto assets. At the same time, trueEx affiliate trueDigital will be launching a bitcoin swap contract to be listed in its own planned derivatives marketplace.

The entrance of these two players is part of the growing interest of institutional investors in participating in the digital asset space.

Eris Exchange will be launching its own derivatives exchange and clearing organization around regulated digital-asset futures and spot contracts. The exchange is expected to be a regulated, transparent, and stable venue to trade in the digital market.

Thomas Chippas, ErisX chief executive officer, says the platform is meant to stand out because it offers a regulated venue for spot contracts, and, once the regulatory approval has been handed down, clear transactions.

“Our goal is to fill a gap in the market with an intermediary friendly venue that is fair, safe, and transparent,” Chippas says. “With futures and spot contracts on one platform, we are integrating digital asset products and technology into reliable, compliant and robust capital markets workflows.”

He adds it was important to offer the trading of spot contracts with the same level of surveillance as cash-settled contracts.

It is backed by investors including DRW Venture Capital, TD Ameritrade, Virtu Financial, NEX Opportunities, Cboe Global, Pantera Capital, and Third Stone Partners.

The derivatives exchange is covered by a designated contract market designation while ErisX’s clearing operations must be approved as a designated clearing organization (DCO) by the US Commodity Futures Trading Commission (CFTC). The regulator is still in the process of approving the clearing organization.

Chippas says the trading of spot will begin in the second quarter of 2019, pending state licenses that the company is required to get.

“Work on the technology is proceeding apace but we do have to get the requisite licenses,” says Chippas. “We plan to launch our spot trading in the second quarter and we’re hopeful by that point our DCO application has been approved allowing us to proceed with our futures offering.”

Meanwhile, trueDigital will launch a Bitcoin swap contract through its CFTC-regulated swap execution facility. While the introduction of a swap is noteworthy, this contract also stands out for another reason—it will be physically settled. Currently, established bitcoin derivatives contracts, such as the Chicago Mercantile Exchange’s, are financially settled in US dollars.

Nick Goodrich, director of business development at trueDigital, says the contract is physically-delivered as this method sidesteps issues around cash-settled instruments relating market and price manipulation.

“We started this process a little over nine months ago, gathering industry and market feedback and really arrived on a physically delivered swap because there’s been so much discussion around indices,” Goodrich says. “We have taken a look and saw that a physically delivered contract in a lot of other markets has been very well received and is oftentimes referred to as a truer pricing mechanism for the contract.”

He adds one of the benefits of a physically delivered swap is its transparency and optionality. Clients may choose where to mandate custody of the assets if they wish.

Goodrich notes part of the development of the bitcoin contract was determining how to address processes such as custody, clearing, and settlement so the firm looked towards other markets like foreign exchange.

TrueDigital is in the process of launching its own derivatives marketplace, and is working with a number of market-makers to provide liquidity, including cryptocurrency trading firms Altonomy, Genesis Global Trading, and XBTO Group.

Goodrich says the swap contract targets funds with large exposure to digital markets.

Institutional investors, both Goodrich and ErisX’s Chippas say, have been looking for ways to enter the crypto space but in a way that offers some sort of regulatory protection, even if regulations around digital currencies are still very much in limbo. Institutional investors are already concerned over latency issues of some crypto exchanges. 

“Institutions are in different places in terms of their demand for digital assets but what ties them all is they just want to find the right market for them,” says Chippas.

Goodrich agrees, saying the launch of derivatives exchanges and TrueDigital’s swap contract is a natural evolution for the market.

“We want to create a similar market in digital assets as in the more traditional markets; we think it’s a solid evolution of the space.”