LedgerX Wins CFTC Approval to Offer Physically Settled Bitcoin Futures

Siamak Masnavi

New York City-based LedgerX LLC ("LedgerX") which is "a US-regulated trading platform for physically-settled digital currency derivatives", has had its application for designation as a contract market approved by the U.S. Commodity Futures Trading Commission, which means that it can now offer physically settled Bitcoin futures contracts.

LedgerX LLC, which is a wholly-owned subsidiary of Ledger Holdings, Inc., "has been registered with the CFTC as a swap execution facility and derivatives clearing organization (DCO) since July 2017." And now (actually, effective June 24, to be precise), it is "also registered as a designated contract market (DCM) under Section 5 of the Commodity Exchange Act (CEA) and Part 38 of the CFTC’s regulations." 

LedgerX had asked the CFTC to "amend its order of registration as a DCO," which limited LedgerX to clearing swaps, so that it could clear futures listed on its DCM.

The approval of this application, which was first filed in November 2018, means that the firm can now list Bitcoin derivatives contracts (including both options and futures) and offer them to both retail and institutional clients.

According to a blog post by LedgerX's CEO (Paul Chou), these new products will trade on a new platform called "LedgerX Omni":

"With our new license granted today, both retail and institutional customers can interact in the same transparent marketplace, LedgerX Omni, the first and only regulated US institution to offer these capabilities to the retail audience. We can now provide a robust market for a much broader audience, providing access to individuals who want to get exposure to the fast-growing crypto investment sector via derivatives products that they could not access in the past."

He also added:

"By operating both the exchange and clearing house, we can uniquely offer clients a vertically integrated trading and custody solution."

As for when people will be able to trade on LedgerX Omni, he had this to say:

"We have the license, but we also have a long waitlist. On-boarding will be performed slowly and require your patience, to allow us to thoroughly test and monitor the technology systems throughout the process, and to make sure that the customer experience is outstanding."

Also, apparently, the company plans to launch later this year "additional crypto-specific derivatives."

Juthica Chou, Co-Founder and Chief Operating Officer at LedgerX, told Coindesk that LedgerX was trying to be the first company in the U.S. to offer physically-settled Bitcoin futures:

“There’s no doubt that we’re looking to be first, we’re looking to be the incumbent. We think we’re better positioned and we want to be there to serve customers of all sizes.”

According to Bloomberg, the LedgerX CEO told them in a phone interview that LedgerX "plans to let consumers living in the U.S. or Singapore sign up to trade, starting in July," and that initially, "investors will have to deposit at least $10,000 in dollars or Bitcoins, but the minimum deposit will go down to zero within a year."

Chou said:

“The license will allow retail to directly invest, and they will represent the majority of the market. Retail investors are the ones that drove Bitcoin to this level.”

He also told Bloomberg that he believes that "other exchanges are about six months behind LedgerX in gaining regulators’ approval for expanded access to Bitcoin derivatives."

Meltem Demirors, the Chief Strategy Officer at CoinShares, was one of the first to congratulate the LedgerX team:

According to data from CryptoCompare, at press time, Bitcoin is trading at $11,346, up 3.02% in the past 24-hour period:

BTC - 24 Hour CC Chart - 25 June 2019.png

Featured Image Credit: Photo via Pexels.com 

Half of Financial Pros Think Bitcoin Will Outperform S&P 500 in 2020

Michael LaVere
  • New survey by Chainalysis found that half of financial professionals expect bitcoin to be the top-performing asset in 2020.
  • Illicit activity and small market size were the primary reasons given for less engagement in crypto-assets.

A new survey polling bank executives and financial professionals found that half believe bitcoin will outperform the S&P 500 next year. 

According to a survey conducted by blockchain analytics firm Chainalysis, 48% of the financial professionals polled said bitcoin will be the investment class with the highest growth rate over the next 12 months. The Chainalysis study asked more than 350 finance professionals, including bank and credit union executives, which asset class was likely to be the top performer next year. 

While half said that bitcoin would be the top-performing asset, one-third of respondents predicted equities (S&P 500) to be the leading investment class, followed by “fixed income (Bloomberg Barclays Bond Index) and the House Pricing Index (HPI) at 13% and 5%, respectively.”

Despite high expectations for bitcoin, financial providers said that retail engagement was low. The majority of respondents said less than half of their clients were involved in crypto, with one-quarter of respondents saying that less than 10% of their clients invested in the asset class. 

Chainalysis CEO Michael Gronager commented on the gap between investor expectation and reality, 

Many finance professionals understand that cryptocurrency presents a massive opportunity, yet institutions are hesitant to enter the market due to perceived risk and some don't even realize the exposure that they already have to cryptocurrency.

The potential for illicit activity was cited as the primary barrier for professionals getting involved in crypto-assets, with one-quarter of respondents claiming the market wasn’t yet big enough.

Featured Image Credit: Photo via Pixabay.com