MGT Capital Investments has entered into a Letter of Intent (LOI) with Tera Group, owner of TeraExchange, a Swap Execution Facility regulated by the Commodity Futures Trading Commission to form the first publicaly traded US Bitcoin derivatives exchange.
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According to a press statement, both companies will work to finalize and execute a definitive agreement by March 16, 2015, per the LIO. After that, MGT plans to file a combination S-4 Prospectus and Proxy Statement with the SEC.Pending stockholder approval, MGT will issue shares of its common stock to the current owners of Tera, representing 70 percent of the pro forma equity of the combined companies at closing.
This isn’t the first Bitcoin exchange that is on the drawing boards. Late last month, a former Goldman Sachs trader announced plans for a bourse to trade and clear Bitcoin derivatives, under the name LedgerX.
Growing consumer and merchant adoption of bitcoin is driving demand for regulated capital markets solutions. By combining with MGT, Tera will create a unique public offering to support the essential infrastructure needed for a vibrant global bitcoin ecosystem, said Christian D. Martin, Chairman, CEO and co-founder of Tera,
The proposed merger with Tera gives immediate and future value to our stockholders, while creating a robust platform for the growth of the industrys first listed bitcoin derivatives exchange, said H. Robert Holmes, Chairman of MGTs board of directors. As such, the proposed transaction supports the strategic goals of both companies, and we whole-heartedly recommend it to shareholders.
Tera’s move appears to be part of its plan to promote bitcoin derivative trading. In September 2014, Tera launched TeraExchange, the first regulated platform for Bitcoin derivatives, and a spot Bitcoin price index, according to a press statement. The Tera Bitcoin Price Index (TeraBit) employs what it calls a “dynamic algorithm that compiles and filters data on a real-time basis from a number of widely utilized global Bitcoin spot exchanges.”
The TeraBit Index will be used as the settlement rate for USD/Bitcoin derivatives transactions.
