Cryptocurrency derivatives supplier LedgerX plans to turn out to be the primary U.S. agency to supply bodily settled bitcoin futures contracts.
The firm introduced Monday that it has filed for a delegated contract market (DCM) license, which might permit LedgerX to supply physically-settled bitcoin futures merchandise to its clients. Unlike the cash-settled bitcoin futures supplied by CME Group (and beforehand, Cboe), clients would obtain the precise bitcoin underlying a contract after it expires, relatively than the U.S. greenback equal.
And maybe extra notably, LedgerX can goal retail traders with its new providing, mentioned Juthica Chou, who serves as each chief danger and working officer at LedgerX.
“We’ll be able to service customers of any size, we won’t be restricted to [institutional clients],” Chou instructed CoinDesk.
Once accepted, LedgerX will supply bitcoin, bitcoin choices and bitcoin futures to retail clients via a brand new platform, dubbed Omni.
Omni, constructed on LedgerX’s present infrastructure, will act because the supplier for each custody and buying and selling companies. LedgerX’s unique platform first acquired regulatory approval to launch in July 2017, although the platform itself solely went dwell later that 12 months.
The new platform can even make the most of LedgerX’s present institutional liquidity pool to “offer retail customers a top tier experience from day one,” Chou mentioned.
Launching a retail platform with futures choices has “always been our plan,” Chou mentioned. The firm first started providing physically-settled derivatives merchandise in October 2017, buying and selling $1 million in its first week.
“Once the platform had proved stable and we got an operational cadence, we filed for a license with the CFTC,” Chou mentioned, including:
“For us this is a philosophically important move because bitcoin is available to everyone and we … really wanted to make our derivatives products available to all investors as well.”
The firm filed for a license to supply futures contracts in November 2018, and has been engaged in a “constructive dialogue” with the CFTC since, Chou mentioned. However, she couldn’t touch upon a timeline for when the CFTC may approve LedgerX’s utility, or on what kind of reception the agency is anticipating from clients.
The CFTC has already granted LedgerX two licenses, permitting the agency to behave as a Swap Execution Facility (SEF), which is the corporate’s trade platform, and a Derivatives Clearing Organization (DCO), which is the clearinghouse.
LedgerX’s DCM utility is due to this fact simply an extra license on prime of its present permissions. Operationally, the corporate is already set as much as present futures companies, According to Chou.
“We’re custodying [bitcoin] 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.”
Since its launch, LedgerX has supplied establishments with regulated physically-settled bitcoin swaps and choices merchandise, and claims some 200 totally different corporations as clients.
While CME and Cboe each started providing cash-settled bitcoin futures in December 2017, no firm has launched a physically-settled equal to this point – although that’s not for lack of making an attempt.
Several main corporations plan to launch physically-settled bitcoin futures contracts, together with Bakkt, the agency constructed by New York Stock Exchange mum or dad Intercontinental Exchange; Seed CX, the crypto trade backed by Bain Capital Ventures; and ErisX, a startup backed by brokerage TD Ameritrade.
However, all of those corporations, too, are awaiting their very own regulatory approvals, giving LedgerX a shot at being the primary to go dwell with an precise product.
“This is a natural evolution and it stems from the fact that we’ve been operating a physically settled market for more than a year and a half so it’s been a natural [extension],” Chou mentioned. “We’re always excited to be the first.”
Juthica Chou picture by way of CoinDesk archives