New York City-based LedgerX LLC (“LedgerX”) which is “a US-regulated trading platform for physically-settled digital currency derivative”, 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 LedgerX has been waiting for since November 2018, means that the firm can now list Bitcoin derivatives contracts (both options and futures) and offer them to both retail and institutional clients.
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, Paul Chou, the Chief Executive Officer of LedgerX, 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.”
“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.”