Crypto space is a competitive market to be in. Inventions are regular, and competition makes each business/trader to operate on toes. This time, one crypto derivatives providing company LedgerX is planning to move ahead in the competition by becoming the first ever US based company to offer physically (in the real world) settled bitcoin futures contracts.
LedgerX is the US government regulate spot and option facilitating an exchange for bitcoins. LedgerX has recently announced that it has applied for the DCM (designated contract market) license. Having this application will enable the company to offer physically-settled bitcoin futures to its customers.
Physically settled bitcoin futures are not like the cash-settled bitcoin futures. CME Group used to provide customers with the cash-settled bitcoin futures. With this feature, the company would target retail investors, said the top level executive of the company. The executive said that the company would be able to serve its customers no matter what the size of the group is. Once allowed by the authorities, LedgerX will be permitted to offer bitcoin, bitcoin (options and futures) to retail customers. This will be done through Omni.
Omni is a crypto trading layer which is built on LedgerX’s current infrastructure. It will facilitate both the custody and trading services. LedgerX had its original platform which received the approval from the US regulatory in July 2017; however, the platform took a year to go live. But the new platform would be using the existing institutional liquidity pool of LedgerX the executive said.
She said that the company always wanted to launch a retail platform offering futures. The company started offering physically-settled derivatives in October 2017, which helped the company to trade in a huge volume worth $1 million in the first week itself.
LedgerX had filed for a license to CFTC in November 2018 and was busy in conducting “constructive dialogue” with the authorities since then. However, the executive did not comment anything on the duration for when the CFTC might approve LedgerX’s filing, or it will not get approved at all!
The CFTC has granted LedgerX two licenses in the past which has helped the company to operate as a Swap Execution Facility (SEF) and a Derivatives Clearing Organization (DCO). The present application would nothing but an extra license for the company.
As per the executive of the company, Chou said,
in the same way that we currently do, we’ve obviously been live and operational for more than a year and a half, and we have a license from the CFTC, the DCO license, that allows us to custody bitcoin.”