LedgerX Introduces First-Ever CFTC-Regulated Bitcoin Savings Accounts

  • LedgerX has launched a bitcoin savings account.
  • The new product uses an underlying "call overwrite" options strategy.
  • An investor that has deposited some bitcoin receives either some interest or 2X the spot price on the product's purchase date if the price on maturity is approximately double what it was on the product's purchase date.

On Tuesday, LedgerX, which is a federally-regulated institutional trading and clearing platform with approval to trade/clear swaps/options on cryptocurrencies, announced an industry first -- a Bitcoin (BTC) savings account product called "LedgerX Savings."

The NYC-based LedgerX is licensed by the U.S. Commodity Futures Trading Commission (CFTC) as both a Swap Execution Facility (SEF) and a Derivatives Clearing Organization (DCO).

The basic idea of LedgerX Savings is to enable investors to earn a yield in fiat (USD) on their bitcoin holding. Rather than just HODL and hope for the bitcoin price to go up, this product lets investors utilize what is known amongst derivatives traders as a "call overwrite" options strategy without having to know anything about derivatives.

Over the past few months, LedgerX noticed that the technique of depositing some bitcoins into a LedgerX account then selling a call option for a future date (typically, three, six, or twelve months later) with a strike price higher than today's spot price was very popular with many/most of its existing clients. So, it decided to create a new savings product that greatly simplifies the work of using a call overwrite strategy by hiding that complexity behind a simple user interface that doesn't even mention the word option. Here is a screenshot from this interface:

ledgerx screenshot.png

The premium (in USD) for selling the underlying call option that is collected is calculated as an approximate yield and updated in real time. After choosing the LedgerSavings product for the desired maturity, the USD amount is available for immediate withdrawal. The associated bitcoins are locked for the duration of the savings product. There are three possible maturity dates (with varying rates): three months, six months, and twelve months.

At maturity, if BTC is selling for approximately twice the current spot price, you will exchange your BTC for that amount (i.e. you have a 2X exit). Otherwise, you get your BTC back and keep the USD interest you received when buying the savings product.

Juthica Chou, Co-founder and Chief Operating and Risk Officer at LedgerX told Forbes in an interview: "This interface will definitely be skewed to the long bitcoin holders, who will likely only deposit bitcoin and who will want to earn interest off of that bitcoin.”

 

Feature Image Credit: "bitcoin" by "Steve Garfield" via Flickr; licensed under "CC BY 2.0"

Cannabis Shops Turn to Crypto Apps Amidst Coronavirus Cash Shortages

Michael LaVere
  • Cannabis shops in Boulder, Colorado are using bitcoin payment app Strike to conduct "contactless" exchanges.
  • Cash shortages and lack of sanitation are causing businesses to find alternative means for transaction. 

Cannabis shops are using bitcoin payment services to conduct business in place of fiat amidst the coronavirus pandemic. 

According to a report by CoinDesk, cannabis dispensaries in Boulder, Colorado have been onboarded to the closed beta for Strike, a bitcoin payment service application founded by lighting network supporter Zap. 

Zap, founded by Jack Mallers, has been operating a closed beta for the payment application Strike which allows users the option of sending bitcoin or dollars and receiving funds in their bank account. The application uses a simple QR code interface, similar to Venmo, that allows users to send funds without having prior knowledge or expertise with bitcoin. 

Mallers said, 

Every Strike user is given a public domain at strike.me. We’re using Lightning for really fast online settlement of value transfers. … It’s also beneficial for privacy on the sender’s side.

Johnny Kurish, general manager at Boulder’s Helping Hands Herbals cannabis shop, said the application allowed his dispensary to process $1,000 worth of purchases since being added to the beta last week. 

Kurish said the dispensary will switch to only accepting Strike payments, which allow for contactless exchanges in light of the coronavirus pandemic. 

He said, 

We’re really lucky to have curbside drop-offs. We check the ID through the roll-up window, deliver the cannabis to a podium in front of the car. We’re happy to reopen with an option that’s safe for our staff.

Featured Image Credit: Photo via Pixabay.com