LedgerX wins CFTC approval for crypto-settled Bitcoin futures 🚨 This article is 5 years old...
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LedgerX wins CFTC approval for crypto-settled Bitcoin futures
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Updated: Apr. 6, 2020 at 1:19 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
LedgerX, a U.S. based Bitcoin derivatives exchange, finally won approval from the CFTC to offer BTC spot and physically settled derivatives contracts. Customers living in the U.S. and Singapore will be able to sign up to trade in July 2019.
Physically settled Bitcoin futures and options finally approved in the U.S.
After years of rumors about U.S. crypto derivatives that payout with Bitcoin, a cryptocurrency exchange finally acquired approval from the country’s main trading regulator.
LedgerX, a New York-based cryptocurrency exchange, received clearance from the U.S. Commodity Futures Trading Commission (CFTC) to trade physically-settled futures and swaps contracts in Bitcoin. Official CFTC approval will allow LedgerX to offer its new products to investors in the U.S. and Singapore, the Financial Times reported.
Trading will start in July, the company said, with investors initially required to deposit at least $10,000, either in U.S. dollars or in Bitcoin. However, the company’s CEO Paul Chou told Bloomberg that the minimum deposit will go down to zero “within a year.”
“The license will allow retail to directly invest, and they will represent the majority of the market,” Chou said. “Retail investors are the ones that drove Bitcoin to this level.”
LedgerX the first exchange to expand Bitcoin derivatives offer
Up until Jun. 25, the only way to settle Bitcoin futures was cash. DRW, a high-frequency trading group that has been active in the crypto market, told the Financial Times that using cash markets and other related auctions to finalize prices of crypto derivatives was “inherently flawed.” They also added that all exchanges should be able to list physically delivered contracts.
However, LedgerX is currently the only one that can do so. The exchange’s competitors, most notably Bakkt, ErisX, and SeedCX, are currently going through the lengthy application process with the CFTC.
And while CME Group and Cboe Global Markets have both been testing trading and delivering Bakkt Bitcoin futures, Chou believes LedgerX is “way ahead” of those test efforts. He said that other exchanges are at least six months behind them in gaining CFTC approval for physically-settled Bitcoin futures.
Getting the green light from the CFTC couldn’t have come at a better time for LedgerX. According to a recent report from Diar, CME Group and BitMEX have seen institutional traders drive trading volumes “to record levels.” Even the Intercontinental Exchange (ICE) is planning on testing its own Bitcoin futures in the second half of July, the report noted.
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Bitcoin
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
CME Group
CME Group is a global markets company empowering participants to efficiently manage risk and capture opportunities in every major asset class..
BitMEX
HDR Global Trading Limited owns and operates BitMEX which is a trading platform that offers investors access to the global financial markets using only Bitcoin.