Bitcoin’s derivatives leader is going public – but not in the way you’d expect.

Tera Group has announced a planned merger with MGT Capital Investments, a NYSE MKT-listed online gaming company. The transaction is a reverse merger that will see Tera assume a 70 percent controlling stake in MGT and, as such, is intended solely as a going public event. As a result, Tera Exchange will become the first publicly listed bitcoin derivative trading platform.

MGT’s shares were priced around $0.50 prior to the transaction announcement, giving the company a market cap of just $3.6 million. Given the legacy gaming operations, the company is not a true shell company in the classic definition of the term, but it is functioning as one for the purposes of this transaction. Tera says that it has yet to decide on its plans for the company’s existing business, which could have some synergies with a bitcoin business.

Derivatives have been held out by many bitcoin market observers as a critical stepping stone in the currency’s maturation, both offering a means of hedging against exchange risk and as a means of reducing bitcoin’s notorious volatility. This is particularly true for institutional investor and professional traders who are accustomed to being able to bet on more than just the long equity side of a given trade. Derivatives also give investors access to bitcoin exposure without actually having to hold digital currency directly. Further, a more predictable bitcoin price is a prerequisite for many merchants' willingness to not just accept but also hold bitcoin in their businesses, rather than immediately converting back into fiat currency after every transaction.

In a sign of the growing interest in this category, former Goldman Sachs Executive Director Timo Schlaefer announced the launch of Crypto Facilities, a UK Bitcoin derivatives exchange, less than one week ago.

Tera launched its bitcoin derivatives exchange in September 2014, obtaining Commodities Futures Trading Commission approval and becoming the first regulated entity to offer digital-currency swaps. Founder and CEO Christian Martin is a veteran emerging markets trader. Contracts on the exchange are priced in dollars and are managed based on the TeraBit Index which sets the dollar to bitcoin settlement rate. The company has seen more than 1 million bids and offers in the six months since launching, although a smaller number of transactions executed on its platform.

Reverse mergers are more common than many people realize, but are still viewed as an alternative, and in many ways “lesser” avenue to a public listing. Companies that choose this route are often small-cap companies that don’t merit traditional IPOs, but yet still want the benefits of being a public company – things like investor transparency, share liquidity, and a stock-based currency to use for acquisitions. Reverse mergers are typically quicker, less expensive, and require less scrutiny from bankers and regulators than an IPO. Many reverse mergers have matured into highly successful businesses including, notably, Turner Broadcasting System, Occidental Petroleum, Berkshire Hathaway, Texas Instruments, Blockbuster Entertainment, and True Religion.

The goal of this public listing, albeit one by an alternative means, is to make Tera more attractive to potential investors, according to Martin. The company is looking to raise new capital to continue building out its platform, including in the near term adding more advanced marketplace statistics. For clients of the platform, this transaction should change little about the company’s day-to-day operations. The deal is expected to be finalized by March 16 and will see Tera join Bitcoin Shop, BitGold, and BTX Trader as fellow publicly listed bitcoin companies.

“Growing consumer and merchant adoption of bitcoin is driving demand for regulated capital markets solutions,” Martin says. “By combining with MGT, Tera will create a unique public offering to support the essential infrastructure needed for a vibrant global bitcoin ecosystem.”