Elwood Technologies Touts Strong Focus on Crypto Derivatives

Now backed by tier one banks Goldman, Barclays and Commerzbank, Elwood CEO James Stickland predicts “a huge amount of derivatives action.”

Cryptocurrency trading firm Elwood Technologies says its focus, following this week’s hefty $70 million funding round that included three tier one banks, will be on institutional-grade crypto derivatives.

Big banks like the ones who participated in Elwood’s Series A raise – Goldman Sachs (GS), Barclays (BCS) and Commerzbank’s CommerzVentures – need to hold cryptocurrencies at arms length for now, which means not holding the underlying asset itself but gaining exposure via futures and options contracts.

“There’s a huge focus on derivatives,” said Elwood CEO James Stickland in an interview. “It’s a great way for tier one banks to get involved in a synthetic nature without having to hold the underlying. Actually, there are huge margins and spreads to be made in the derivatives space, and the traders that are coming from those institutional houses are very used to that asset class, so they can deploy similar strategies.”

Out of the banks backing Elwood, Goldman is the most advanced, having been among the fist on Wall Street to start trading bitcoin futures. Commerzbank became the first big German bank to move towards hands on crypto adoption, announcing that it had applied earlier this year for a license to custody crypto assets from BaFin, Germany’s Federal Financial Supervisory Authority.

“In the field of digital assets, Commerzbank wants to help shape emerging digital ecosystems, especially with regard to custody and trading in non-physical assets,” a spokesman for the bank told CoinDesk via email. “We are pursuing our own digital asset strategy and are also planning our own offerings for our customers in the coming years. The future offer is initially aimed at institutional customers.”

Barclays fan club

Barclays is not yet following the likes of Goldman and Citi (C) offering crypto derivatives trading, but has a long history of working with permissioned blockchain tech to handle tokenized financial instruments. Barclays also provided banking services to Coinbase (COIN) for a period of time back in 2019.