LedgerX Races Against Bakkt To Launch Physically Settled Bitcoin Futures Contracts

LedgerX To Launch Physically Settled Bitcoin Futures Contracts

LedgerX is set to make history as the first firm to launch physically settled bitcoin futures contracts. This was revealed on April 15, 2019, when the firm announced that they had filed for a designated contract market (DCM) License that would enable them to provide this option for their customers. Should they succeed in getting this license, they would beat out Bakkt, who have long been looked at as a likely contender for the title.

The benefit of physically settled bitcoin futures contracts over cash-settled bitcoin futures (which are offered by the CME Group) is that when the contracts in question expire, the owners are paid in bitcoin and not US dollars. Of course the behemoth in the space is the Bakkt bitcoin futures platform that has everyone excited for the future and what they bring to market.

Retail Clients

Besides the obvious benefit in store for customers, LedgerX also has something to gain form this. Along with the bragging rights, they can better target retail customers for their firm through this offering.

“We’ll be able to service customers of any size, we won’t be restricted to institutional clients,” said Juthica Chou, who serves as both chief risk and operating officer at LedgerX.

This is a bit of a departure as firms are usually making changes to attract institutional clients but this goes to show that both institutional and retail clients are important in the Blockchain ecosystem.

Should they receive this license, LedgerX will be able to offer bitcoin, bitcoin options and bitcoin futures to this clients and these will be sold via their Omni platform.

The Omni platform was designed based on their current infrastructure and will act as a custody and trading services provider. LedgerX’s liquidity pool will also be taken advantage of to “offer retail customers a top tier experience from day one,” Chou said, adding that launching a retail trading platform has always been in the books.

“Once the platform had proved stable and we got an operational cadence, we filed for a license with the CFTC,” Chou said, “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.”

Previous Filings

The company first filed for a License to offer futures contracts in late 2018 and has so far received two License form the CTFC, a Swap Execution Facility (SEF) and a Derivatives Clearing Organization (DCO).

“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,” said Chou.