US-based brokerage firm EF Hutton has licenced intellectual property (IP) that provides a way to hedge Bitcoin (BTC) to The Bitcoin Hedge Foundation.
A press release sent by EF Hutton’s CEO and head of crypto research and analysis, Christopher Daniels, notes that the licence royalty is approximately 12% of the hedge value.
“To illustrate, if the value-added is $200 million, which represents only 1/2% of the value of all Bitcoin, then EF Hutton’s royalty value would be approximately $24 million,” the press release reads. “It is not yet possible to determine the royalty because of the actual hedge value not yet known.”
However, hedges of other instruments, such as a short-interest on New York Stock Exchange (NYSE) stocks have a value of nearly zero to 40% of the float, as of 8th October, according to short interest data published by the Wall Street Journal.
“EF Hutton will use any royalty income for working capital, to redeem debt and to fund expansion, including acquisitions,” the firm explains.
It filed for patent protection earlier this year. Due to the steep decline in the BTC market and the high volatility of its price, “many Bitcoin holders have desired a hedge that would enable them to mitigate losses and lock-in gains”. It says that, therefore, there’s been a considerable increase in demand for a viable hedge.
“EF Hutton developed this solution over many months and had worked with world-renowned economists and mathematicians to refine the intellectual property that underlies this solution. In addition to the EF Hutton team, a series of world-class experts have contributed to this solution including PhDs with expertise in Mathematics and Economics,” it claims.
A non-profit to make BTC more appealing
The Bitcoin Hedge Foundation is a non-profit organisation with a mission to make BTC more widely appealing by mitigating volatility and protecting downside exposure.
“EF Hutton has always been an innovator, and this development is consistent with the history of our brand,” says Daniels. “It is an undisputed fact that EF Hutton predecessors developed online trading, universal life insurance and the fee-only financial advisor model that is today’s standard model for delivery of financial advice. We are proud to continue the legacy of Edward F. Hutton with an innovation that satisfies a significant market need.”