LedgerX Gets License from US Regulators for Physically-Traded Bitcoin Futures to Retail Investors
In April we announced that LedgerX, the first federally regulated digital assets exchange and clearinghouse, had filed for a license to offer retail investors physically backed Bitcoin (BTC) futures. The company received the license on June 24th from the regulators allowing the company to offer an unlimited number of retail customers physically backed BTC spots, options, futures contracts, and more.
The U.S Commodity Futures Trading Commission (CFTC), the major regulation entity on virtual currencies and digital assets, offered two licenses to LedgerX – the swap execution facility (SEF) and derivatives clearing organization (DCO). By obtaining this license, LedgerX beats Bakkt, a long-time contender, to become the first company to offer physical BTC futures.
The announcement further reports that the service will first be offered to U.S. and Singapore citizens. The investors will be able to trade these futures on LedgerX’s Omni platform after registering using any official government document. More countries across the world are expected to follow.
Physically traded Bitcoin futures are different in that the future is settled using Bitcoins instead of USD once it expires. Given the rising cryptocurrency market, retail investors would appreciate a bitcoin payout rather than the USD payout.
The CEO of LedgerX, Paul Chou, was enthusiastic on the future of the physically traded BTC futures contracts but asked the investors to be patient as the company clears the backlogged requests first before taking up new ones. He said,
“While we have the license, we also have a long waitlist of people that we want to on-board slowly to make sure the systems work well and the customer experience is outstanding.”
However, the early users of the Omni platform will be able to trade the BTC futures. Paul further said,
“The good news is day one traders will have access to market makers on the platform who will provide competitive prices that they have been quoting 24/7/365 over the last 2 years.”
The move by LedgerX is aimed at retail investors, unlike previous BTC futures contracts submissions that target institutional investors. This shows the blockchain industry is growing across the wide market and not only the big corporations.
Bakkt Expected To Offer BTC Futures in July
In an announcement released earlier this month, Bakkt confirmed they will begin the testing the bitcoin futures contracts on the Bakkt Warehouse on July 22nd. The COO of the company, Adam White chose the date to commemorate the landing of Apollo 11.
The contracts will have a minimum price fluctuation of $2.5 per Bitcoin. These contracts can be executed at $0.01 per Bitcoin and a listing cycle that can last for as long as 12 months. The final settlement of these contracts is going to be at the Bakkt Warehouse.
Adam appreciates the effort that blockchain companies and regulators are putting in to see the industry flourish. He said,
“This is not a small step. This launch will usher in a new standard for accessing crypto markets.”