Bitcoin gets boost as U.S. watchdog approves first swap

(Reuters) – TeraExchange on Friday launched a swap based on the bitcoin virtual currency, becoming the first to receive approval from a U. S. federal regulator for a financial product based on the budding technology.
The derivative allows clients to protect the value of their bitcoin holdings by locking in a dollar value, offering an insurance against the astronomical price swings that have plagued the computer-generated currency.
“For a merchant to take bitcoin, there wasn’t until this product a regulated way for them to put on a hedge to manage the risk … and now with this product they can,” Christian Martin, who heads TeraExchange, told Reuters.
Unlike conventional money, bitcoin is independent of control or backing by any government – something its advocates like, but that has also led to calls for more oversight and raised questions as to how to treat it for tax purposes.

This post was published at Reuters on Sep 12, 2014.